Bank over-reliance on Credit Agencies

Dewpoint

Luckily after 40+ years of hard graft, I'm a relatively comfortably off retiree with a private pension, state pension and some savings. I've always paid off the balance of my current CC on time and never paid any charges. I have no loans, no dependents or debts, but when I tried to apply for a CC with my established Zopa account (into which I had savings), their "pre-acceptance" credit check turned me down. No reason given!

Now, it doesn't bother me that much. I was planning to transfer my banking arrangements from NW, including all my DD, standing orders and CC business, but won't now. In fact, I'll explore the possibility of getting paid to transfer my business! And unlike some recommend, I certainly won't be sacrificing anything at the altar of the Credit agencies to improve my rating.

My point is. Why has the finance industry (and Martin Lewis) become so obsessed and dependent on Credit Agency assessments that they can afford to turn away good business like mine? It seems they have substituted often inaccurate Agency assessments for good common sense.

la531983

Savings are irrelevant because in theory you could go out in 30 minutes and blast the lot.

Emmia

Credit agencies allow a consistent assessment of individuals and how they fit into a risk profile. Ultimately banks need to have a way of determining how likely you are to repay borrowing /keep your account in good order etc.

Ultimately people no longer know the manager of the bank personally, decisions are made by an algorithm not a person.

Zopa might also have a preference for customers which your risk profile doesn't fit, hence the decline.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6687222/bank-over-reliance-on-credit-agencies

Youre mistaken, in the UK CRAs do not do the assessment. In the UK the lender sets the algorithm and the CRAs are the source of the credit history that is fed into the algorithm which the lender then makes their decision on.

In other countries, like the US, the CRA itself sets a score that the banks see. The score the CRAs make up in the UK is just for the marketing team to sell you stuff with, no lender sees it or uses it.

flaneurs_lobster

You've made your views on credit reference agencies very clear, but one point you make is not correct - CRAs do not provide "assessments", they simply provide factual data about current credit availability and agreements in place together with basic identity data and legal judgements.

The lenders then combine this data with their own criteria for new business to make a decision. You may simply not meet the profile for the type of customer that they are currently looking to take on.

Might be worth checking your reports (MSE has ways to check all 3 for free) to make sure that there are no entries there (real or mistaken) that might be affecting your application for credit.

Why are you looking to transfer all your banking to Zopa (or anyone else)?

Usual advice would be to have at least 2 banks available with ready funds just to give resilience in case of issues with one of them.

Any particular reason you wanted a Zopa CC? Why not another card or increase in credit limit at NatWest?

diveunderthebonnet

https://forums.moneysavingexpert.com/discussion/comment/82173108#Comment_82173108

I doubt many bank branches have a manager these days😀😀😀

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82173686#Comment_82173686

Depends on the size of the branch, larger ones will have their own manager, smaller ones will have a roaming manager that covers 3-5 branches. The "manager" however is very much focused on man management not having any input into underwriting decisions etc

diveunderthebonnet

https://forums.moneysavingexpert.com/discussion/comment/82173702#Comment_82173702

Where i the old days every branch had a manager ,if you wanted a loan or any borrowing you had to normally see him/her.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82173720#Comment_82173720

Yes and no… those tiny branches still wouldnt have had a manager but then they would have been called a sub-branch instead. Even those with a branch manager there were hard limits to what they themselves could approve with managers of smaller branches often being much more limited than those of the big flagship branches. In the big branches you would have multiple layers of management with differing personal limits.

Unfortunately this was way before my time, the likes of Natwest did away with it in the late 80s to early 90s before I was 18.

Handlesbanken the last time I spoke to them still have delegated authority to branch staff, if someone is desperate to be able to eyeball the decision maker. The reality for many though is the new model is better, you can apply for credit at any time of the day or night rather than having to book an appointment with the manager during working hours to get some condescending commentary

diveunderthebonnet

https://forums.moneysavingexpert.com/discussion/comment/82173734#Comment_82173734

We were married in 1971 and in our town we had several banks and they all had managers ,now HSBC (was the Midland ),TSB,Nat West etc have all closed as the younger generation use on line banking ,ps so do we as we have little choice😁

HillStreetBlues

https://forums.moneysavingexpert.com/discussion/comment/82173106#Comment_82173106

A person could also get sacked in the next 30 mins.
In a way it's a strange system, what you might get is preferred to what you have actually have.