Financial history


(Jack) #1

I was having a chat with someone earlier regarding the outlook a mortgage lender would have on someone applying for a mortgage in the near future who doesn’t have any long term relationships with a specific bank.

For example: if they’d had their Monzo account for around a year, and decided to close their long term legacy account via CASS which they’d had for 12 years. Would that viewed in a bad light?

Some suggest yes as they like to see long term relationships, others say it’s not that big of a deal unless you had access to a credit facility on the account.

What’s your opinions on this? :thinking:


#2

Personally it is the only reason I haven’t closed down my 1st bank account and credit card. No idea if it actually makes a difference. I can’t imagine it will for those with otherwise perfect “credit scores” (I know there is no such thing as a credit score, hence the “”), but could think it might be the proverbial straw breaking the camel’s back for someone who might otherwise just about pass the lender’s criteria.

What I’d be more concerned about is that if Monzo is your only bank account they only report to one Credit Referencing Agency. And to the one that’s least commonly used. Thus it will likely appear to some lenders as though you have no current accounts at all. That, I imagine, might be more of a problem.

Another reason why I think having Monzo as your only current account might not be the best choice at the moment …


(Jack) #3

Good point, I suspect there isn’t much of a difference unless you had an overdraft on the account. Credit is the more important factor I’d imagine.
Never thought about who reports to what reference agency. That’s a good point, it’s always handy to have a secondary account open as a backup etc if possible.


(Jonathon) #4

Not necessarily. I did ask a friend in finance about this and she mentioned that while credit management is important, a lender (or mortgage provider) do value longevity of an account too (stability). Everyone is obviously different, but I am conscious that Monzo only report to one agency and I have a 12 year old current account with Halifax and I just can’t quite close it just yet.


(Jamie 🏳️‍🌈) #5

I think if a mortgage lender saw one switch recently, whilst they might take note, it probably wouldn’t count much against other positive indicators. However, if they saw numerous switches and accounts being opened and closed over a number of years, it would probably be taken as a large negative indicator.


(Dan) #6

I would be pissed if mortgage lenders took length of time with bank into consideration, especially since all the banks bribe you into switching to them with free cash.

I used to switch banks as frequently as my energy provider. As soon as another bank offered a good deal or I had a bad customer experience, I’d switch. I shouldn’t be penalised for this.


(Dan) #7

This is a good point, Monzo should send information to Experian/Equifax too. Most mortgage lenders will consider your record on all CRAs rather than isolating to just one. I’m pretty sure most legacy banks send information to all CRAs. I get that it probably isn’t cheap for Monzo to do this, nonetheless I would expect to see this soon.

EDIT: Just checked Equifax/Experian. Alongside CallCredit, Starling uses Equifax but no evidence of them on Experian. Still, 2/3 ain’t bad.


(Dan) #8

If money is the reason why Monzo won’t submit to all three CRAs, then they should probably do a crowdfund round to support this among other initiatives :wink:


(Jamie 🏳️‍🌈) #9

Mortgage lenders do take stability and length of time with a bank into consideration. Not much you’ll do to change that.

Just keep your main bank account open. Open a secondary account and use that to switch around from bank to bank.


(Dan) #10

This is a very valid point. I’m surprised the UK government hasn’t said they can’t factor that in when looking at lending. Changing banks regularly should be an indication of a good customer who is looking after money (changing for a good deal / better service) especially with the new PSD2… we shouldn’t be made to look bad for lending because we change banks…


#11

I’d be surprised (and disappointed) if the government got involved in that level of detail. Do you feel that would be compatible with the sort of free market based economy we have in this country?


#12

It is not just mortgage lenders but personal loans too that will often have years at a bank, years at an address, and years in your job as factors. If you keep changing job, home and bank it all counts against you, heaven forbid you do all three!


(Dan) #13

That’s my point though…

I change jobs every 2 years or so… because I get bored, I’ve changed address 4 times in the last 4 years and changed to Monzo…

Just because I’ve done that doesn’t make me a bad person for credit… in fact, I could go out and buy most things if I wanted so why should they count that against me… seems stupid :see_no_evil: and not very “fair”


(Dan) #14

Would that not make it a “free market” though by opening it up to all? Like I said above just because you do those 3 things doesn’t mean you are a bad person who won’t pay debts…


(Kevyn) #15

You would be considered not very stable with your lifestyle, even if you consider yourself stable. Moving from job to job, address to address. It could imply you can’t hold down a job or that you are being forced to move address for possible bad reasons. I am not saying you are by the way.

Banks must by law assess affordability and ability to repay debt when they consider a mortgage/credit application. Stability is an indication of ability to repay debt.


(Dan) #16

I know, it just seems silly :pensive:

I currently have £20,000 in credit currently open to me so they can’t see me as being that bad :stuck_out_tongue: and Monzo offered me £1000 OD :see_no_evil:


#17

No. In my opinion free marker means that businesses decide how to do their business (within limits, of course). I would feel that the government telling lenders how to decide whom to lend to in that level of detail would be wrong.


(Dan) #18

Ahhh I see, fair point :slight_smile:


(Dan) #19

Gonna start a petition.


#20

The thing is it is not just some unjustified bias, but based on actuarial data proving an increased risk of default and insolvancy.