Challenger Banks - do they disadvantage you?

Kewsea

Random question to settle a 'debate' - if you hold your main bank account with, say Starling or Monzo does that have a negative impact on how you are regarded credit wise?  As opposed to if your main account os one of the high street banks?

I can't see how it would other than most of them generally only offer a current account, so they only report that rather than other forms of financial status to the CRA's.  However, if you were to have a loan/CC with another bank as most do then I don't see the issue. 

A contrary opinion I have been given is that because of the 'only' current account option, consumers who bank exclusively with a challenger are seen as less attrative/reliable in credit terms.

FlorayG

Monzo do a credit card, a savings account, an ISA and loans just like any other bank. They are my main bank

friolento

I don’t see why it would matter to a lender which bank you hold your current account(s) with as long as your credit files are in good shape. See https://www.moneysavingexpert.com/loans/credit-rating-credit-score/

As an aside, having more than one current account, at different financial institutions, is a sensible precaution in case there is a problem, regardless of reason, with one of them. 

Having all your finances - current account, mortgage, loans, savings, credit card, investments - might sound attractive, and is pushed by many banks. It is, however, a high risk strategy and more often than not won’t give you the best deals.

nyermen

Cant say today, but FYI in my past dealings in application scorecards (Used for decisions on lending such as mortgages etc) we were never interested in the type of bank (is challenger bank in fact a formal category?), just the type of account (eg Standard vs Basic, payday loan, etc) and location (eg. UK vs overseas)

Rob5342

I'd have thought that they would only look at the status of all your accounts. I don't see why having a current account with Starling and a credit card with Halifax would be viewed any differently to having a current account with Natwest and a credit card with HSBC.

WillPS

AIUI the only person who gets to see the name of the lender on a credit record is the subject themselves. All other searches will reveal is 'a current account' or 'a credit card'.

If we go with that being the case, I cannot see how holding a Monzo/Starling account would be viewed any differently to any other bank account.

Barkin

Off the top of my head, and without thinking too hard, the only disadvantage (if it is a disadvantage...) that I can think of is that I won't be around for long enough to build the 40-odd year relationship with Starling that I have with my main high street bank. 

friolento

Barkin said:

Off the top of my head, and without thinking too hard, the only disadvantage (if it is a disadvantage...) that I can think of is that I won't be around for long enough to build the 40-odd year relationship with Starling that I have with my main high street bank. 

You can retain that 40 year account stability, and it will work in your favour should you need to apply for credit, and still also have an account with Starling or Monzo or Revolut etc. Or even with several or all of them.

PRAISETHESUN

Barkin said:

Off the top of my head, and without thinking too hard, the only disadvantage (if it is a disadvantage...) that I can think of is that I won't be around for long enough to build the 40-odd year relationship with Starling that I have with my main high street bank. 

I mean given your credit files only show the last 6 years of data anyway, lenders won't be able to see that you've held an account with a given provider for any longer then that I'd have thought - 6 years and 1 day vs 40 years would look the same to them. Of course, Starling (or whoever else you hold accounts with) will know and can use that information how they see fit, but other lenders wont. Not really like loyalty gets rewarded these days though...

penners324

Well it didn't stop be getting a £400k mortgage 

born_again

Kewsea said:

Random question to settle a 'debate' - if you hold your main bank account with, say Starling or Monzo does that have a negative impact on how you are regarded credit wise?  As opposed to if your main account os one of the high street banks?

I can't see how it would other than most of them generally only offer a current account, so they only report that rather than other forms of financial status to the CRA's.  However, if you were to have a loan/CC with another bank as most do then I don't see the issue. 

A contrary opinion I have been given is that because of the 'only' current account option, consumers who bank exclusively with a challenger are seen as less attrative/reliable in credit terms.

In a word NO....