Drop in score after opening current account???

sfax

As an aside, what should the CRAs do?

a. Drop the score altogether in favour of a list of potential adverse factors in a person's credit history
b. Reveal the algorithm, make it open source in programming speak
c. Keep the score but make it clear that the score itself is not given to lenders, it's just the CRA's interpretation of your credit history

It's also the fault of the lenders and regulators because failed credit applications just point you to the CRA and pass the buck. Perhaps they should be more specific and say something like we didn't like your debt utilisation ratio.

Ebe_Scrooge

sfax wrote: »

Perhaps they should be more specific and say something like we didn't like your debt utilisation ratio.

They will never do this - it's confidential, and competitive, information.

As an example, Lender A prefers to lend to middle-aged people in stable jobs, making a small but steady income from them.

Lender B prefers young city high-flyers, who earn mega-bucks, but could be laid off at any moment. They make big money from charging high interest rates, because no-one else will lend to that group. But there's a high chance of their customers defaulting.

OK, these are completely made-up scenarios. But if HSBC, for instance, published their "ideal customer profile", we'd all be applying, and putting "what they want to hear" on the application form.

takman

sfax wrote: »

As an aside, what should the CRAs do?

a. Drop the score altogether in favour of a list of potential adverse factors in a person's credit history
b. Reveal the algorithm, make it open source in programming speak
c. Keep the score but make it clear that the score itself is not given to lenders, it's just the CRA's interpretation of your credit history

It's also the fault of the lenders and regulators because failed credit applications just point you to the CRA and pass the buck. Perhaps they should be more specific and say something like we didn't like your debt utilisation ratio.

As long as lenders use the correct terms when pointing back to the CRA such as "check the information/history held at Experian/Equifax/Callcredit" and don't say anything about checking your "credit score " then I think that's good advice for them to give.

Lenders can't be expected to reveal anything to do with how they process applications or why they are declined otherwise it can make them succeptable to fraud if this information is shared each time and their criteria are exposed.

In regards to the score i think being open about what it really means (Option C) is the best thing that can happen for consumers. They should have to make a statement every time the score is displayed or advertised.