Headline rate 'scam' - M&S Loans

BenjaminClarke

Faith177 wrote: »

You're rating on things like Experian ect mean nothing despite what they try to convince you with their annoying adverts

Each company has its own lending criteria outside of that score. The score can be an indicator but has little to no bearing on the lenders actual decision

I'm sorry but I find that quite hard to believe. For example, Tesco Bank have ran a check of our credit files. It hasn't changed our scores much because we haven't applied for any other credit in over a year, however, it still shows that they ran a search. Now the next lender might look at that and see it as a warning, "why have Tesco searched this file and not offered them the money? They must have seen something they didn't like so this looks higher risk and therefore we'll charge this customer a higher rate of interest." Or can lenders not see such searches? I understand that each lender has it's own lending criteria but they don't run a credit check for nothing.

regency_man

Nearlyold wrote: »

"What impact would this have?" Eh let me think about that - customers would routinely lie on their applications to match their circumstances to the published criteria?

Oh come on, that's a ridiculous position to take. Firstly, you can't base policy on the assertion that everyone is dishonest, otherwise the criminal justice system of this country wouldn't work!! (I swear to tell the truth, the whole truth...)

Secondly, it changes very little in the grand scheme of things, people who are going to lie on their application are going to lie on their application regardless. It would just put more onus on the banks to more carefully validate their applicants. Anything truly relevant can be pretty easily verified (debt, home ownership, employment). Everything else like 'loan purpose' could be argued to be irrelevant anyway, it's an unsecured loan product. If i say I'm going to use it on a car, then my grandmother dies and I use it to pay her funeral expenses - is that a problem?

Faith177

BenjaminClarke wrote: »

I'm sorry but I find that quite hard to believe. For example, Tesco Bank have ran a check of our credit files. It hasn't changed our scores much because we haven't applied for any other credit in over a year, however, it still shows that they ran a search. Now the next lender might look at that and see it as a warning, "why have Tesco searched this file and not offered them the money? They must have seen something they didn't like so this looks higher risk and therefore we'll charge this customer a higher rate of interest." Or can lenders not see such searches? I understand that each lender has it's own lending criteria but they don't run a credit check for nothing.

Please see post above yours Gaz puts its quite well imho

BenjaminClarke

Gaz83 wrote: »

The "score" given by the ratings companies such as Experian doesn't really exist. At least, not any more than it exists to convince people to keep spending money on an Experian subscription.

When you apply for credit, the lender doesn't see that score at all. All they see is the raw information on your credit file. They then use their own internal algorithms to decide whether to lend someone money based on the information on the credit file.

Your score doesn't exist, and is pointless.

No I do understand that. That isn't what I meant though. I meant that the check Tesco Bank did for this loan will show up so when we apply with another lender it would have a bearing on their decision and ultimately the interest charged. Hopefully it won't. Our bank has since agreed to the loan in principle. We are waiting for the paperwork so we'll see what interest they are offering.

Pixie5740

BenjaminClarke wrote: »

I'm sorry but I find that quite hard to believe. For example, Tesco Bank have ran a check of our credit files. It hasn't changed our scores much because we haven't applied for any other credit in over a year, however, it still shows that they ran a search. Now the next lender might look at that and see it as a warning, "why have Tesco searched this file and not offered them the money? They must have seen something they didn't like so this looks higher risk and therefore we'll charge this customer a higher rate of interest." Or can lenders not see such searches? I understand that each lender has it's own lending criteria but they don't run a credit check for nothing.

I find it difficult to believe that people are still gullible enough to think that the credit scores generated by Experian, Equifax and Call Credit (none of whom lend money I might add) are actually used by lenders. They are not.

Lenders use the information in your credit files (they do not use the score) to build a pattern to determine what type of borrower you are likely to be and therefore whether or not they want to lend to you and at what rate. Lenders also base their decision on things such as affordability.

Now I see from your other post that you wanted a consolidation loan. Why do you need a consolidation loan...because you have credit card debt. Why do you have credit card debt...most likely answer is that you've been living beyond your means otherwise you'd have paid the £5k off by now.

Pixie5740

regency_man wrote: »

Oh come on, that's a ridiculous position to take. Firstly, you can't base policy on the assertion that everyone is dishonest, otherwise the criminal justice system of this country wouldn't work!! (I swear to tell the truth, the whole truth...)

Secondly, it changes very little in the grand scheme of things, people who are going to lie on their application are going to lie on their application regardless. It would just put more onus on the banks to more carefully validate their applicants. Anything truly relevant can be pretty easily verified (debt, home ownership, employment). Everything else like 'loan purpose' could be argued to be irrelevant anyway, it's an unsecured loan product. If i say I'm going to use it on a car, then my grandmother dies and I use it to pay her funeral expenses - is that a problem?

Nobody has a right to credit. Lenders were much more lax pre-2008 and look how that ended.

shortcrust

The credit reference agencies are partly responsible for this sort of upset. They tell people that their score is really important, the key to the castle, and people build their 'perfect' score into their wider identity. It becomes a personal insult when they're not offered top tier finance. I suspect this thread is really just a variation on the "Stop the press, my score is 999 but I was declined for a credit card!" theme.

Pixie5740

regency_man wrote: »

You've missed the point - these decisions are not being based on whether people being 'good with their money'. I am very good with my money. They are being based you on not being the 'ideal customer' which is my case was apparently because I'd moved house within the last two years and put 'Miscellaneous' as the loan purpose. Two things, which had I known before applying, would have put me off this particular lender.

Who says you are very good with money?

You? How do you know how you compare with other borrowers? You don't have an overview of each M&S loan application unlike M&S Bank?

Experian? Ask them for a loan then. Please tell me you do not pay £14.99 a month for your Experian credit score, financially savvy people wouldn't.

Gaz83

BenjaminClarke wrote: »

I'm sorry but I find that quite hard to believe. For example, Tesco Bank have ran a check of our credit files. It hasn't changed our scores much because we haven't applied for any other credit in over a year, however, it still shows that they ran a search. Now the next lender might look at that and see it as a warning, "why have Tesco searched this file and not offered them the money? They must have seen something they didn't like so this looks higher risk and therefore we'll charge this customer a higher rate of interest." Or can lenders not see such searches? I understand that each lender has it's own lending criteria but they don't run a credit check for nothing.

Doesn't matter what you find hard to believe.

Tesco will have looked at the raw data provided by the CRA.

They won't have looked at the score. They aren't even provided with the score. They don't see it.

Nearlyold

regency_man wrote: »

Oh come on, that's a ridiculous position to take. Firstly, you can't base policy on the assertion that everyone is dishonest, otherwise the criminal justice system of this country wouldn't work!! (I swear to tell the truth, the whole truth...)

Secondly, it changes very little in the grand scheme of things, people who are going to lie on their application are going to lie on their application regardless. It would just put more onus on the banks to more carefully validate their applicants. Anything truly relevant can be pretty easily verified (debt, home ownership, employment). Everything else like 'loan purpose' could be argued to be irrelevant anyway, it's an unsecured loan product. If i say I'm going to use it on a car, then my grandmother dies and I use it to pay her funeral expenses - is that a problem?

I didn't say all customers. And of course you don't base policy on the premise that everyone is dishonest BUT you do have to take into account "Moral hazard" when formulating policy.