Credit checks???

[ginger 69]

Is it true that barclays use their own credit scoring system and that they dont consult credit agencies?

[sammy snake]

I worked for a high street bank although not Barclays, I think they all credit score according to different criteria but all use credit reference agencies as far as I am aware. 

 

Credit scores give points for various things like being a homeowner, having a telephone, being employed, stuff like that.  Credit agencies confirm that you live at the address given and give the gistory of any credit agreement you have taken out over the last so many years (were the repayments on time, any bad debts, any defulats etc)

 

So you can pass the credit score but fail if you have a bad credit record and thus your application gets turned down.

[sammy snake]

of course that should read 'history' and 'defaults'

[Oneeyedvic]

What you may find though is that they do not ocnsult credit reference agencies under certain circumstances - eg if you have had an account with them for 5 years, have your salary paid into the account, have never had a returned cheque /dd,  have a mortgage with them etc etc etc, they would probably not credit score you if you wanted a �5000 loan.

[stevie21]

I would hope that anyone anywhere who is giving out credit would always carry out a credit search.
Barclays would either have to be brave or stupid if this is a widespread policy All lenders should combine credit searching (Dear Experian, this is Jimmy from Barclays. Does ginger have any arrears, bad debts or CCJs outwith Barclays that we don't know about?) with credit scoring (How many brownie points are we going to award ginger for the way that he/she conducts their Barclays accounts?) and give credit decisions based on the results of both.
Bank of Stevie.

[Oneeyedvic]

Sorry Stevie - I disagree.

 

If you have your wages paid into an account, and have all your dds paid from that account, experian will not really tell you much you don't already know. If the account doesn't have any returned items, and lots of cancelled cheques/ dds, then the probability is that they would not be in default /arrrears with anyone.

 

And yes I use the words probable, but not all lenders subscribe to Experian anyway (eg neither my Accucard nor NatWest card show up on my Experian searches) - so all data is 'probable'.

 

Always try your own bank first if you have any adverse - they know you best!

[stevie21]

By credit, I don't include folk like BT who allow you to run up a phone bill and pay at a later date, I specifically mean lenders such as banks, credit cards etc.

I stand by my comment. If I have my salary paid into one account which has my main DDs and is run impeccably then a credit search tells me much more than that one account alone does.
Have I made applications for credit elsewhere? (Yes, I've just been approved for 4 credit & store cards so am at risk of becoming overburdened with debt. Do not give me more debt as I already can't afford the �4000 credit limits on each of the store/credit cards that I've just taken out).
Have I kept up to date with all other credit for the last 12 months? (Only with the Bank of Oneeyedvic - I have arrears elsewhere at the Ginger Credit Cards plc).

Am I financially associated with anyone else who has lots of debt which I may become legally liable for?

Need I go on?

[Oneeyedvic]

Yes Stevie go on.....I know for a fact that NatWest don't search own custoemrs who have been runnning sensible accounts:

Account opened 5 years ago. Money beingg paid in regularly. DDs and Standing orders and cheques being paid on time every time. Every month �100 goes into savings account (and I may ask where the other accounts your fictional person has if his wages are being paid into this account). After 5 years of this, chap comes into bank for a loan. Repayments will be �80 month. We can see he has the money in his savings account and we know he can afford it as he has this as a surplus to his income.

 

Bank of Vic says Yes.

 

Searches have their places but can be far to over used. I just searched one of my customers - several bits of CAIS data from Experian - nothing (except voters role info) on Equifax. Perfectly clean searches (all '0's, some settled and on voters since 1988)  but was rejected by BOS and Lombard - classic example of credit scoring going badly wrong and banks only relying on one search - suits me fine - extra business for me (secondary finance company)

[stevie21]

Oneeyedvic, you completely evaded the points that I raised about having applied for credit elsewhere recently, having arrears elsewhere and also being ties to another debtor.

If you read my answer you don't see anything about other accounts which implies other current accounts, just other store cards (they practically give these things away, and with huge credit limits and "huge'r" interest rates) and credit cards (with certain companies, ditto).

One other example would be if someone comes to me for credit and already has 10 credit searches recorded in the last month, then I'd assume that they knew they weren't credit worthy and were going round every lender in the land desperately trying to find an equivalent of "Capital One" who would foolishly throw money at them.

Credit searching should be used all the time in applications for examples that I've cited : bank accounts, store & credit cards, and all but the tiniest loans.

[Oneeyedvic]

Stevie - as you are no doubt aware no system is fool proof, and if someone is intent on fraud they will commit it.

 

My point is that the vast majority of people run one current account and their wages get paid into that account. It is not easy to set up another current account with a different bank (and even more difficult to get credit facilities with them) if you are not having wages paid intot that account. As you said in a previous post, an overdraft will be in accordance to salary paid in.

 

Thus, if you have applied for store cards etc, if they have been accepted, you bank will know, as a dd will have beeen set up. If they have not been accepted then the customer does not have a liability so no problem.

 

If they have defaults registered on equifax/experian it is because they have not been paying their bills. Again this will be apparent to the bank as cheques / payments would have been bounced - or even direct debits cancelled.

 

Being tied to another debtor is again a red herring - shoud a 22 year old son who lives with his parent but has run perfect credit agreements for the last 4 years be tied to his father (a serial bankrupt) who was asked to be a guarantor once and so a financial link was made?

(And again if someone knows the systems they can always file a noc disassociation with the agencies.

 

 

As I said, it is possible to defraud the above system , but then if you know how to play the game it would be possible to defraud any system.

[stevie21]

Oneeyedvic, I disagree with almost every assertion that you're making in that last post but can't be bothered arguing and addressing every point individually.
All I will say is that if your bank makes financial decisions based on assumptions it draws from your bank acount (no store card DDs means that the customer has no store cards whatsoever!?) rather than facts easily available to them then I'm a little worried.
To answer the ginger's original question, in your case Barclays will carry out a credit search and then decline your application.

[Oneeyedvic]

Sorry Bank Of Stevie but two things:

 

Firstly, what an assumption to make - Ginger will be turned down for credit?????

A more accurate answer to Gingers question would be: If you are an existing Barclays customer who have been banking with them for a number of years, and you are applying for a 'small' loan or overdraft, they may only use their 'internal' system. This is by no way means you will be accepted by them, but depends on the way you have run your account. However, if you are not a Baclays customer, they will contact credit reference agencies.

Secondly, 'facts easily available' - yes - but they do cost money, and I know of no Bank that wants to spend money when most of the information they have is there for them to see. And yes, if there is no direct debits / cheques being paid to a finance company then in all probability there would be no store cards. This would mean that everytime they purchased something on a store card they would take the money out of their account and pay cash over the counter with a counterfoil. Not very common place!

[stevie21]

The "turned down for credit" assumption is based on the growing number of questions that ginger is asking about finance... searching online for "bad credit, credit cards", saying that he/she has debts of �1000 and a "not so perfect credit history" etc. etc.
I don't believe that ginger is looking for an overdraft on an existing account with Barclays, he/she is looking for a current account (rather than the Basic Account that has been offered by someone). Read ginger's other questions if you won't take my word for it.
Credit searches do not cost a lot to carry out & banks waste money on more expensive things on an hourly basis.

"if there is no direct debits / cheques being paid to a finance company then in all probability there would be no store cards."
and you criticise me for making assumptions? On a bank statement, the payee of cheques isn't shown, only the amount, date and serial number. The payee is not recorded anywhere to be perused at leisure later by e.g. underwriters. A photocopy of the cheque would have to be ordered and that'd be a logistical nightmare for lenders to do every time someone asked for an OD. You may work in finance but you clearly don't work in banking.

"This would mean that everytime they purchased something on a store card they would take the money out of their account and pay cash over the counter with a counterfoil"
*Completely* wrong. What you're saying is that there are only two possible ways of paying a bill: by direct debit or by cash. I suggest you look at the back of one of these bills as I know of many people who are not comfortable with DDs & pay everything by posting cheques.

As ever, I don't want this to turn into an argument but please don't state inaccuracies as fact.

[Oneeyedvic]

Okay Stevie, apologise for critising your previous post - clearly I had not read previous posts by ginger.

 

I accept my errors, however, I have not misrepresented any inaccurancies as facts. I have merely put (how I believe) credit scoring in a lot of banks work. Although I do not work in a bank, many of my qualifications are banking orientated.

 

I am also aware as a FACT,  that NatWest do not credit scrore on some personal loan / overdrafts as I am a personal banking custoemr of theirs and subscribe to creditexpert and check who has searched me on a weekly basis.

 

If NatWest do this as a policy, I assume (rightly or wrongly) that the others do same/similar.

 

Different underwriting criterias. Bank of Stevie may not give a loan without whole picture, other institutions do though.

 

(And I am sure the default rate at Bank of Stevie is very very low) ;-)

[stevie21]

My final word on the whole sorry saga is this...
I am not doubting that you could apply for a small loan and not be credit checked but that then leaves another door open to customers becoming overburdened with debt (and I think that, on average, consumers in this country already have way too much debt).
If you apply for any credit outwith Natwest then the other lender may not have any way of knowing that you have the financial commitment of this loan. For that reason, they may assume that you have more disposable income than you actually do and lend you money that they wouldn't have done otherwise.

I'd say overdrafts on existing accounts are a different kettle of fish from loans so I won't mention them as I'd be at risk of agreeing with you & thus upsetting myself.

[fashionbabee]

i do know that barclays use a credit scoring system however it is not linked to experian or equifax. So they still make credit scored based lending etc just not in the same way. My friend who had a trust deed (step before bankrupcy was oble to get a bank account with barclays when others had turned him down)