Campaign for clarity on credit refusals gains momentum

Lenders and advice bodies have admitted that the industry needs to provide clearer information to consumers on credit scoring.

Campaign for clarity on credit refusals gains momentum

At conferences including the Credit Summit last week, during Credit Strategy’s inaugural Credit Week, lenders and advice bodies discussed the need for lenders and the industry generally, to do more to help consumers understand the credit scoring process – particularly when they are refused credit.

Crucially, they debated how lenders could provide more precise reasons to people on why they are refused credit, when consumers’ applications for mortgages, loans or credit cards are refused.

The topic was discussed at length at the Credit Summit as Credit Strategy officially launched its Credit Awareness Week campaign, run in association with Experian.

The campaign, designed to increase consumers’ awareness and understanding of credit scoring, is encouraging lenders to provide clearer information to consumers in their exchanges on applications for credit.

As part of the initiative Credit Strategy and Experian have created a portal – Creditawarenessweek.com – that shows consumers how to improve their scores and with an interactive tool, tells them what steps to take after being refused credit.

Speaking on a panel at the Credit Summit, Andrena Saripo, head of retail credit at Clydesdale & Yorkshire Banking Group, was asked how lenders could tell consumers they’ve been declined an application without giving away all the information about their decisioning.

She said: “It’s a tricky one, because you don’t want to give away why you’ve made the risk-based lending decision, and the credit-worthiness assessment. It comes back to the affordability piece and how lenders can be more transparent around that issue. We’re pointing consumers to the credit reference agencies when actually, the issue could be that the consumer hasn’t been able to prove affordability. That’s somewhere where we could do better.”