Declined Bank Account

lauren1234568

Hi,

I'm pretty new to credit and this Website.

I recently tried to apply for a second current account through the bank I already use and have a first current account with. However, my application was rejected due to poor 'credit scoring' , when I checked my credit report there was nothing too negative there apart from a lack of credit history. I am currently unemployed so I think this might be why I was rejected. Does anyone know how badly this rejection will affect my overall credit rating?

Also, I was offered a basic bank account once I was rejected. I am considering accepting this, but I am unsure if having a basic account will affect credit rating too?

Any advice is appreciated,

Thanks!

Grumpy_chap

Hi Lauren,

The "credit scoring" that the bank refers to will be their internal assessment of your financial status, not the "credit score" that the CRA's share with you online (which is a largely meaningless indicator).  As you are an existing customer, the bank will assess based on information they can obtain from the CRA's plus information they have already within their inhouse systems.

What you can, and should do, is to check the CRA's that there is nothing incorrect showing.

With regard to the reject, one single rejection won't have a big impact.  Several rejections in quick succession will do as it makes you look desperate for credit / financial services.

HTH.

Ebe_Scrooge

lauren1234568 said:

Also, I was offered a basic bank account once I was rejected. I am considering accepting this, but I am unsure if having a basic account will affect credit rating too?

In addition to the excellent advice from Grumpy Chap ..... I'm assuming by "Basic bank account" you mean one without an overdraft facility?  That would make sense - an overdraft is just another form of credit.  Your internal score from the bank probably means they're not willing to offer you an overdraft, but there's no reason that you can't have a basic account.  And a basic account won't affect your credit rating - if it does appear on your report, it'll just show "zero" every month, as current accounts don't show credit balances on the CRA reports, they'll only show if you're overdrawn.  Even if you've got a million pounds sat in your account, it'll show as zero on your report.  In fact, it might possibly be a (very small) positive on your file.

NewLeaf1986

Credit reports do actually differentiate between "Current Accounts" and "Basic Bank Accounts".

I have two separate sections on my credit file for each type, so other lenders can see what you have in the way of fully fledged current accounts and what you have in the way of basic accounts.

How this factors into their credit scoring is of course a mystery, and is likely to differ from bank to bank. 

dr_adidas01

NewLeaf1986 said:

Credit reports do actually differentiate between "Current Accounts" and "Basic Bank Accounts".

I have two separate sections on my credit file for each type, so other lenders can see what you have in the way of fully fledged current accounts and what you have in the way of basic accounts.

How this factors into their credit scoring is of course a mystery, and is likely to differ from bank to bank. 

Actually lenders don’t see if it’s a basic bank account or a full current account, they also don’t see who the provider of your bank account/s is. 

It’s the same for your credit cards and mobile contracts, utility accounts and mortgage accounts. 

Only the report you see shows who the provider of your accounts are! 

cymruchris

Is there a particular reason why you need a second current account with the same bank?
You do mention that you are going through a period of unemployment at the moment - so hopefully that won't last too long - it might be worth waiting a month or two - and then trying a bank outside of your current banks group. (Some banks are part of the same group - so a reject from one means that there's a fair chance you'll be rejected from the others in the same group too.)

NewLeaf1986

dr_adidas01 said:

NewLeaf1986 said:

Credit reports do actually differentiate between "Current Accounts" and "Basic Bank Accounts".

I have two separate sections on my credit file for each type, so other lenders can see what you have in the way of fully fledged current accounts and what you have in the way of basic accounts.

How this factors into their credit scoring is of course a mystery, and is likely to differ from bank to bank. 

Actually lenders don’t see if it’s a basic bank account or a full current account, they also don’t see who the provider of your bank account/s is. 

It’s the same for your credit cards and mobile contracts, utility accounts and mortgage accounts. 

Only the report you see shows who the provider of your accounts are! 

They don't see who the account provider is but they do see whether it's a full account or basic account, the account type descriptors are totally separate from one another just as personal loan and credit card account type descriptors are separate from one another. 

NewLeaf1986

Highlighted in green is the account type descriptor, which the lender credit checking an applicant does see
Highlighted in red is the institution name, which the lender doesn't see.

Of course, I'm not sure how the presence of a Basic Bank Account over a Current account plays into the credit scoring models of other banks and lenders, none of us do, but it will be visible to them what type of banking arrangements you already have in place and have had in the past, just not who they've been with. 

Given that no applicant can "Choose" to have a basic account - most if not all banks now require applicants to submit an application for a fully featured current account and are only offered a basic account if they fail the criteria for a full account - it could conceivably be seen as a negative by some underwriters. Or not. 

Anyone who builds credit scoring models for major banks and lenders in the UK is welcome to chime in

adamp87

NewLeaf1986 said:

Highlighted in green is the account type descriptor, which the lender credit checking an applicant does see
Highlighted in red is the institution name, which the lender doesn't see.

Of course, I'm not sure how the presence of a Basic Bank Account over a Current account plays into the credit scoring models of other banks and lenders, none of us do, but it will be visible to them what type of banking arrangements you already have in place and have had in the past, just not who they've been with. 

Given that no applicant can "Choose" to have a basic account - most if not all banks now require applicants to submit an application for a fully featured current account and are only offered a basic account if they fail the criteria for a full account - it could conceivably be seen as a negative by some underwriters. Or not. 

Anyone who builds credit scoring models for major banks and lenders in the UK is welcome to chime in

Isn’t that more you can see it but the other can’t see it other than current accounts, the report you can see isn’t the same as what lenders can see from my understanding.

Saying that I’ve never seen a basic account ever on credit reports in the past, but I don’t have one now to see if that’s changed. Whose this report with?

NewLeaf1986

adamp87 said:

NewLeaf1986 said:

Highlighted in green is the account type descriptor, which the lender credit checking an applicant does see
Highlighted in red is the institution name, which the lender doesn't see.

Of course, I'm not sure how the presence of a Basic Bank Account over a Current account plays into the credit scoring models of other banks and lenders, none of us do, but it will be visible to them what type of banking arrangements you already have in place and have had in the past, just not who they've been with. 

Given that no applicant can "Choose" to have a basic account - most if not all banks now require applicants to submit an application for a fully featured current account and are only offered a basic account if they fail the criteria for a full account - it could conceivably be seen as a negative by some underwriters. Or not. 

Anyone who builds credit scoring models for major banks and lenders in the UK is welcome to chime in

Isn’t that more you can see it but the other can’t see it other than current accounts, the report you can see isn’t the same as what lenders can see from my understanding.

Saying that I’ve never seen a basic account ever on credit reports in the past, but I don’t have one now to see if that’s changed. Whose this report with?

Lenders still see the *account descriptor* e.g. 

loan, credit card, mortgage, communications, basic bank account, current account, etc. They just don't see who it's with (HSBC, Amex, etc). 

Current Account and Basic Bank Account are identified differently to lenders just the same way Credit Cards and Loans are identified differently to lenders.