General Credit File Query:

shane1104

Hi all,
Quick query here: its more of a general enquiry, not for myself however. In the company i work for, we credit check people for loan purposes. Obviously "credit score" means nothing in my eyes... but something along those lines does bother me, and i can't seem to get/find the answer anywhere!
Scenario:
client has 1x Default for £299: Default date: 31-07-2011 - in his "score" terms does the value matter? would a £15 default have the same effect as a £1000 default?
As our underwriting system (Experian FYI) doesn't seem to take this into consideration (AFAIK) a default is a default, regardless of value?)
When we credit search, we see all information, barring company names due to DPA: but we can see the original default balance and the current balance (so we can ascertain if they've made any payments to lower the default) however, what, if any, use does lowering the balance of a default give? apart from making it easier to settle?

Thanks all!

SeanG79

It depends on the lender and their criteria. Having worked with a few funders, each have their own "scorecard".

So 1 lender may ignore defaults under £x, another my ignore defaults once satisfied and for others any default is an automatic decline.

So to answer your question, with some lenders it will make no difference, for others it will mean access to credit. How it helps people who want to take out a loan with your company, I would think you should have a better knowledge of your internal scoring than anyone on a forum

shane1104

yeh, we have a few review ceilings:


less than 3 defaults totalling less than £1k: 33% reduction of chance
3-6 < £2.5k 50% reduction
anything above £2,5k needs management authorisation with increased APR/possible need for a Guarantor.


but i just don't understand how someone with a £11 default (todays example) would be treated the same as a default for £2k.. seems harsh.. if that's the right term to say.


personally i don't get why you would let an account for £11 go to a default stage! seems madness.

SeanG79

An account could be in dispute, a customer could have cancelled a mobile account and not realised there was a final bill, they may have moved and they may not even know the default is there. There are any number of reasons.

From your figures, an £11 default doesn't hold the same weight as a £2k default.

shane1104

that's what i mean, we have different values of the "weight"
do all lenders have this kind of system? or would say a bank have their eligibility criteria more firm, so a default is a default regardless of "weight"


like a mortgage, from what I've read: settled payday loans can be detrimental there, but a settled account shouldn't mean squat?

SeanG79

All lenders have their own internal "scorecard" and risk appetite.

As for mortgages and pay day loans. A pay day loan suggests an inability to meet current expenses as it is an advance on income. If you cannot meet your current expenses, how can you afford to increase debt? The length of time it will remain detrimental will be dependent on the lender and their risk appetite.