Searches - What's the problem?

a4a

Quark999 wrote: »

Right, so in the case of a mortgage application, you apply for "pristine credit history mortgage #1" and get rejected. You are now less likely to get "so-so credit history mortgage #2".

As you say, no one knows the lending criteria (including mortgage advisors). In above example, how are you a) a bigger risk than if you had gone for "so-so credit history mortgage #2" from the start, and b) how is that in any way a system that is fair to the consumer and not skewed towards the lenders?

You are spot on and this is precisely why the whole system is wrong. Because someone somehwere has decided that multiple applications is a sign of desperation, then thats it.....bang, you are guilty without trial !

a4a

Quark999 wrote: »

Well, the mere fact that credit decisions can happen online and instantaneously, but a credit file takes weeks to get updated shows that something in this system is fairly ancient and out-of-whack. Surely all of this can at least be tracked in real-time - at which point lenders would also always exactly know not only what *applications* a customer has made, but also what credit facilities have been *granted*.

The fact that there IS this delay, and the fact that SEARCHES are instantaneous reinforces my belief that this works in the lender's favour, and they have NO incentive to change it unless forced to do so...

Agreed. There is a very simple answer. There are only 3 main CRA's and they dominate and the lenders love it. That way between them they can control everyone.

There is absolutely no incentive for them to invest in modern technology when they have such a stranglehold.

The CRA industry is in drastic need of a major overhaul and revamp and until either the government or governing body steps in, or until someone with a much more proactive and aggressive attitude like say, Richard Branson comes along and competes, the 3 main agencies will simply continue to provide a slow and inadequate service, which is no good for the individual, businesses or the economy, but is good for them and the banks.

MisterBaxter

a4a wrote: »

'Everyone's situation is different'...I agree but the system doesn't allow for this and lenders seem reluctant to try and find out why someone is making multiple applications. Are they desperate or are they trying to get a better deal or deals?

Therein lies the problem, we expect instant decisions when we make an application, the only way we can get that is to allow a computer to make a decision and as we know computers work in absolutes, they have a predetermined criteria against which they assess and then churn out a response instantly. The CRAs and lenders must have collected huge amounts of data over the years and presumably somewhere along the lines someone has decided that numerous credit applications in a short space of time equates to desperation. We have to take it on faith or trust that they arrived at this decision based on sound statistcal analysis and even if it isn't there isn't a great deal,we can do about it. It clearly isn't going to be accurate in every case but lenders can be as risk averse as they want; sub-prime lenders for example set their threshold at a different level to the more risk averse lenders.

The problem is further compounded by the fact that the customer services staff you end up speaking to in order to discuss a declined application simply defer to the computer for the reason, not having a clue how the computer actually arrived at that decision. The days of someone looking you in the eye an deciding whether or not to trust you with their banks money are long gone.

The standard response in a decline is to review your credit report but they don't tell you why or what it is you are looking for, you are just left to guess. It could be too any applications, it could be income/debt ratio or available/actual credit ratio, or anything else they know about you from either your credit report or from the additional information supplied on the application. I can't see any of them releasing their internal scoring criteria for fear of people playing the system.

Hazzinho

I think people are thinking too much about this, if you manage credit well you don't need to worry about searches, I don't and never have problems. I've never had to make multiple credit applications in a few weeks in my life.

Credit scores you see mean nothing, ignore them.

a4a

MisterBaxter wrote: »

Therein lies the problem, we expect instant decisions when we make an application, the only way we can get that is to allow a computer to make a decision and as we know computers work in absolutes, they have a predetermined criteria against which they assess and then churn out a response instantly. The CRAs and lenders must have collected huge amounts of data over the years and presumably somewhere along the lines someone has decided that numerous credit applications in a short space of time equates to desperation. We have to take it on faith or trust that they arrived at this decision based on sound statistcal analysis and even if it isn't there isn't a great deal,we can do about it. It clearly isn't going to be accurate in every case but lenders can be as risk averse as they want; sub-prime lenders for example set their threshold at a different level to the more risk averse lenders.

The problem is further compounded by the fact that the customer services staff you end up speaking to in order to discuss a declined application simply defer to the computer for the reason, not having a clue how the computer actually arrived at that decision. The days of someone looking you in the eye an deciding whether or not to trust you with their banks money are long gone.

The standard response in a decline is to review your credit report but they don't tell you why or what it is you are looking for, you are just left to guess. It could be too any applications, it could be income/debt ratio or available/actual credit ratio, or anything else they know about you from either your credit report or from the additional information supplied on the application. I can't see any of them releasing their internal scoring criteria for fear of people playing the system.

I agree with almost all of what you say and this is in principle how it works but I don''t think its right.

The bit I don't agree with you on though, is the bit about "somewhere along the lines someone has decided that numerous credit applications in a short space of time equates to desperation".

I believe it is because it is a handy excuse for lenders to change their offer and charge higher rates. What lenders seem to forget (by choice or otherwise), is that years ago when these systems were first set-up, we didn't have mobile phones, broadband and things such as gas, electricity etc were not reported on credit files.

Because we live a world with so much choice and so many people vying for our business, its possible (and in my case very likely), that I want to change deals on a regular basis to reduce my monthly outgoings but everytime I do, I am penalised because someone has to do a credit check on me and this apparently makes me look desperate!

Also, if they have collected all this data (which they certainly have), they could quite easily identify more trends on peoples borrowing habits and be far more sophisticated with their systems and be able to identify those who are desperate and those who aren't.

However, as they have a monopoly and are in collaboration with lenders and under no threat whatsoever from other competitors, there is no incentive to invest money, time or effort in bringing their systems into the modern world, which is quite outrageous really.

a4a

Hazzinho wrote: »

I think people are thinking too much about this, if you manage credit well you don't need to worry about searches, I don't and never have problems. I've never had to make multiple credit applications in a few weeks in my life.

Credit scores you see mean nothing, ignore them.

I disagree, I manage my credit extremely well but am frustrated that if I want to change suppliers, I have to be mindful of how this will effect the way lenders view me.

Why should I be looked upon as someone desperate (and possibly not get the best rate), when I am attempting to reduce my outgoings by switching?

Hazzinho

If you have good credit you find the best deal, apply and get accepted. If you get rejected then your credit might not be as good as you think. Looking around doesn't mean you apply for credit, why would you apply for credit with multiple lenders? Until credit reports are realtime credit application searches are important for lenders.

a4a

Hazzinho wrote: »

If you have good credit you find the best deal, apply and get accepted. If you get rejected then your credit might not be as good as you think. Looking around doesn't mean you apply for credit, why would you apply for credit with multiple lenders? Until credit reports are realtime credit application searches are important for lenders.

What if I decided that I would take a day off work, sit down at my PC and look to change:

-My mobile phone provider
-My broadband provider
-My Sky to Virgin
-My credit card to 0%
-Maybe take a loan at a lower rate than my other credit card to reduce my monthly payments and
-Change my car finance for the same reason.

So as to reduce all my monthly outgoings whilst not increasing any indebtedness.

Why shouldn't i be looked on by lenders as being sensible and responsible rather than desperate ?

PaulW922

I think that whilst most people here may agree, there is nothing any of us can do about it

a4a

PaulW922 wrote: »

I think that whilst most people here may agree, there is nothing any of us can do about it

Many don't seem to want to agree though, I feel as if everyone is arguing with me when I'm simply pointing out another crippling penalty imposed by lenders and CRA's.

This is just one area where CRA's are not helping the consumer or the economy and hold far too much power.

It really is time for change and with the number of people on here as part of this community, why can't something be done to change it?

I'm sure people have tried to lobby before, but MSE is a pretty big group now and has a pretty big mouth with TV & Radio, (not to mention moneysupermarket.com) I don't understand why something can't be done to change the way CRA's and ultimately lenders operate.