Credit Scoring is the term frequently used to cover all aspects of automated decisioning. Many organisations use a combination of credit scoring and policy rules in order to reach a decision.
The Guide to Credit Scoring covers scoring in particular but also some aspects of automated decisioning too. It is the industry standard for UK organisations.
Guide to Credit Scoring (pdf) »
Addendum to the Guide to Credit Scoring (pdf) »
Consumers can find advice and information on credit and credit scoring from a number of sources:
- Experian's Consumer website »
- OFT credit and budgeting advice »
- FSA consumer advice on credit and credit scoring »
- CAB advice on credit and debt »
Decline decisions
The Guide to Credit Scoring and other regulatory guidance states that consumers should be given clear information as to the reason for a decline decision. That does not mean that lenders have to disclose information about their scorecards but they should be clear if they have a particular policy; for example not to lend to people who have been bankrupt.
So, for example a lender may state that the applicant has been declined because they did not achieve a sufficiently high score and if there are other reasons too, they too should be disclosed in order to avoid confusion. If the data obtained from a credit bureau contributed to the decline consumers should be told and recommended to obtain a copy of their credit report. They should be told which bureau to approach and given contact details. It is most important that consumers provide sufficient information when seeking their file. Experian recommends use of bespoke file request systems at www.experian.co.uk/consumer or call 0870 241 6212 or write to Consumer Help Service, PO Box 8000, Nottingham NG80 7WF, preferably using the application form below.
Consumer application form (pdf) »
Handling decline decisions has become more complex with the implementation of the third party data agreement as lenders cannot tell an applicant that their associate has derogatory data. This is not an issue for joint applications but may be more difficult for a sole applicant where partner data has been used. In this instance it is important for lenders to make it clear that not only the applicant’s report but also the associate’s report should be obtained from the bureau.
The recommended wording from the TPD BRS is:
- Applications from consumers that have not opted out of their associate’s data being used:
“Our checks at the CRA indicate that there is information relating to you or your associate which has contributed to our decision not to proceed with your application. We recommend you obtain a copy of your consumer credit report from Experian/Equifax/Callcredit, and suggest you request your associate(s) to do likewise. Your associate(s) will be named on your consumer report”.
- Applications from consumers that have opted out of their associate’s data being used:
“Our checks indicate that there is a material reason why your declaration relating to your associate(s) is inadmissible. We recommend you obtain a copy of your consumer report from Experian/Equifax/Callcredit, and suggest you request your associate(s) to do likewise. Your associate(s) will be named on your consumer report”.
Whatever the situation, under the 1998 Data Protection Act consumers have the right to appeal the decision and/or ask for a manual assessment and lenders should communicate how they may ask for either.
Disclaimer: The information contained on this webpage is provided for general guidance only. It is not intended to provide you with professional advice nor is it intended to substitute you obtaining professional advice.
