I’ve always found with traditional banks, they do a credit check every time you adjust your overdraft. I’m not sure if that’s good practice or required by regulation but slider might result in a hell of a lot of credit checks, causing lenders who look at your file to believe you’re desperate for credit.
Why would this be necessary? Is there a use case where you would only want a specific amount of credit?
Worth checking out the blog article:
1 Like
you may wish to reduce the level of your overdraft if you are not using it all but wish to apply for credit elsewhere
1 Like
Okay, I can understand that and that would make sense. But to avoid the credit check issue “you can slide down but not up” might work quite well?
According to a Starling employee they only do a credit check when first offering the overdraft, or if you want to increase the max. Increasing or decreasing within your max doesn’t trigger a credit check
1 Like
That would make sense.
But people might manage to trigger 10 credit checks by moving the scale in small increments!
But moving the scale doesn’t trigger any credit checks…
It does if you go up, one assumes? Or do they just authorise you for a maximum amount and then let you change your actual allowance up to a maximum?
Yes, exactly. They do one credit check to set the maximum of the slider. You can then move the slider however you want to set your accepted allowance and it doesn’t trigger a credit check. The amount the slider is set to (ie. the accepted overdraft, not the max) is what’s reported as available credit to the CRAs.
Unless you ask COps for an increase to the max, you won’t be credit checked again.
3 Likes
I believe that’s to offer you the overdraft in the first place (or to increase the upper limit). If you already have an overdraft, and you go in the app and move the slider around 100 times a day, it won’t trigger a credit check. But if you decide that the upper limit that they’ve offered you isn’t enough and you ask customer support to increase it, it will trigger a soft credit check when they quote you a higher limit, and a hard check if you take their offer
1 Like
I was told and have chats to support it…
When you first open the account they run a soft credit check to see if they can offer you an overdraft.
When you accept it, they will then run a hard check.
For additional increases they will only run a soft and no hard check is needed. - i.e. only a single hard credit check will be performed.
Ah sorry I thought you were saying before that a soft check was performed whenever you increased the slider. That makes sense, and is actually better than I thought - thanks for the info 
I frequently use the overdraft, but pull in money from elsewhere the same day, so don’t get charged anything. It usually due to the interest only being available on a small part of the current account balance, so storing more money elsewhere to get more interest, or more expenditure one month.
I’m an Android user - waiting for the overdrafts to be made available to Android! I historically have a small overdraft which I rarely use, and if I do it’s usually less than £50 (used of the total, which is say between £200 - £500) and is cleared quickly.
I was wondering what form the hard credit checks take - as I’ve been switching and opening and closing accounts like mad over the last year or two. Co-op, Nationwide, B (Yorkshire Bank), Starling. I’ve also changed my mobile provider about 3 times in about a year and opened a new mobile account because my wife and I decided to harmonise things a bit and used an offer to get a lower price if you have an existing number with the company - which then showed up as a separate account! I’ve also switched credit cards a few times.
So when I look at my credit file I have the - ‘You have opened more than X credit accounts within the last 6/12 months, this has had a negative effect on your credit rating’ and ‘you have made more than 3 credit applications in the last 3/6 months’
I have a relatively small mortgage, low debt (less than £1,500), have never missed a payment on anything ever and earn slightly higher than the average wage.
But because of all this switching around my credit rating is only ‘fair’. Does that actually mean anything and will all this switching affect the chances of being accepted for an overdraft by Monzo?
Anyone know how this works?
1 Like
It will possibly affect you I’m afraid, however that will depend on your overall credit score as well (I know credit scores aren’t actually used as-is by lenders, but they use a similar algorithm to determine creditworthiness so if your score is high there’s a good chance Monzo’s own algorithm will also be happy).
1 Like
Lenders don’t use the score you see on your credit file. This is a number the Credit Reference Agency makes up to sell you services which aim to help you (pointlessly) curate your score with them.
Lenders look at things such as your borrowing history, debt to income ratio, debt to credit limit ratio, affordability, ability to pay debt back on time and pay more than minimum amounts, and, I’m afraid, frequency of applications for credit as this can seem to be an indicator of desperation for credit and bad money management.
Lenders then apply their own, secret, scores to these criteria and see if you fit their target market. This is why you’ll see some companies happy to lend to people they see as poor risk, and others not.
Monzo would take an individual decision as to whether they thought you’d attempted to apply for too much credit, and would, in the process add another check to the pile, which in turn might influence other lenders. But no one knows how each lender assesses potential borrowers, so no one, including the Credit Reference Agencies will be able to say if this will prevent/enhance your chance to get credit in the future.
So by all means apply for another limit with Monzo, but keep in the back of your mind how multiple applications can look to certain lenders in the eco system of your credit history file, which the Credit Reference Agencies provide. If you begin to get rejected, stop applying for a while and try to pay down your debt.
Hope that helps?
5 Likes
That’s helpful yes. The thing is, I have very little debt to pay down.
It’s literally just the frequency of me changing accounts - trying different accounts, switching phone provider, etc - that’s potentially going to muck things up then.
2 Likes
Just as a datapoint regarding that 50p per day…
I recently went overdrawn with my main bank account, and didn’t rectify it until they sent me an email a week later saying my new statement had charges on it (fortunately, the statement period was then or I’d have not noticed it for longer). It turned out to be my credit card, paying off in full after an expensive one-off purchase the month before.
I’d actually gone overdrawn by £280 for 4 days and £380 for another 4 days after a second transaction went out. The charge for that 8 day overdraft incursion was 33p one month and 15p the next.
That 8 days of overdraft was less than a single day of the proposed Monzo overdraft charge, which makes me think you’d have to be seriously maxing out the overdraft for it to be better value than other banks.
6 Likes