Credit Score - United Kingdom

United Kingdom

See also: Credit scorecards

The most popular statistical technique used is logistic regression to predict a binary outcome, such as bad debt or no bad debt. Some banks also build regression models that predict the amount of bad debt a customer may incur. Typically, this is much harder to predict, and most banks focus only on the binary outcome.

Credit scoring is only closely regulated by the Financial Services Authority when used for the purposes of the Advanced approach to Capital Adequacy under Basel II regulations.

It is very difficult for a consumer to know in advance whether they have a high enough credit score to be accepted for credit with a particular lender. This is due to the complexity and structure of credit scoring, which differs from one lender to another.

Also, lenders do not have to reveal their credit score head, nor do they have to reveal the minimum credit score required for the applicant to be accepted. Simply due to this lack of information to the consumer, it is impossible for him or her to know in advance if they will pass a lender's credit scoring requirements.

If the applicant is declined for credit, the lender is also not obliged to reveal the exact reason why. However Industry Associations, such as the Finance and Leasing Association, oblige their members to provide a high level reason. Credit bureau data sharing agreements also require that an applicant declined due to credit bureau data is told that this is the reason and the address of the credit bureau must be provided.

Read more about this topic:  Credit Score

Famous quotes containing the words united and/or kingdom:

    “The professional celebrity, male and female, is the crowning result of the star system of a society that makes a fetish of competition. In America, this system is carried to the point where a man who can knock a small white ball into a series of holes in the ground with more efficiency than anyone else thereby gains social access to the President of the United States.”
    —C. Wright Mills (1916–1962)

    “Then Jesus called the twelve together and gave them power and authority over all demons and to cure diseases, and he sent them out to proclaim the kingdom of God and to heal.”
    —Bible: New Testament, Luke 9:1,2.