Banking and Credit

[IndieSinger]

I'll try to cut a long story short. In October 2002 I moved house. In July 2003 I tried to open a student bank account with HSBC. I got a letter saying I was declined because my 'credit rating was not high enough'.
I asked HSBC for specific details, because I've never owned a store card, credit card or debt in my life. They said they can only go by what their credit referal company say and can't give specific details (they just receive a 'yes' or 'no' from their credit rating referers Experian). So I contacted Experian for my credit history. As I suspected, no debts or outstanding payments of any kind against my name or anyone in my family. Ever.
I know a lot of you are thinking that the reason they declined me is because I've never had credit to have a good enough rating BUT this is a student account - the one they offer to 16 year olds. What they are effectively saying is that students can't have a bank account unless they've alrady had a debt and paid it off on time. And you won't find many 16 year olds in that situation!
I've gone off the point (but congratulations to everyone still reading my life story.. :) the question is - if HSBC are unable (by law, apparently) to tell me specifically WHY I was refused the bank account, and Experian, their credit agency is unable (again 'by law') to tell me why I was refused the bank account, then WHO IN GOD'S NAME CAN TELL ME?! I can't go through life not being able to obtain a bank account!

[Dave Potts]

Nice loooong question. Deserving of an even longer answer :o)

Most lenders base their decisons on credit-scoring but each institution is different in terms of the criteria they set for what scores well and what doesn't, and they are generally quite protective about what information they use to base their decisions on.

Where an application to a credit referencing agency such as Experian or Equifax is used, the chosen agency simply provides the lender with the information held on its file about the applicant.

As you probably know (if, as I suspect you have, you've applied for a copy of your own report) this usually details any outstanding borrowing and shows your repayment records thereon, gives verification of addresses lived at and the relative periods of residence and any CIFAS info which may be relevant (Credit Industry Fraud Avoidance Scheme - highlights any applications for credit where erroneous information may have been supplied by the applicant). The Credit Agency does NOT advise lenders, it simply provides the information on the applicant that it holds on file, and the lender then makes a decision based on this information viewed in tandem with it's own lending criteria.

I suppose the simple answer to your question is that as HSBC will never (and are not required to) reveal to you the basis of their decision not to open an account for you (and they are the only people who could) then you are not likely to learn the reason at all. My recommendation would be look elsewhere - I'm sure there are no end of banks which WILL give you an account as they all use different methods of assessing applicants. I speak from experience. Good luck!

[woofgang]

IndieSinger, from what you say it sounds like HSBC are behaving like a bunch of (insert noun here)s. Was it a student account they refused you for or any account? It may be that they would give you an account meant for ahem, "older people"....are you in fact a student? Two suggestions which may help. My mum, late in life needed a bank account never having had one and the Woolwich were very helpful indeed and 15 years later still are, also I have found the good old Post Office a useful first port of call

[IndieSinger]

Many, many thanks, Dave Potts and woofgang.

Davey - you're absolutely correct about neither of them being at liberty to give me details. I did get my credit report from Experian and there are no debt or any outstanding payments to me or my family and there never have been. I wrote to HSBC to partially complain and partially ask WHY I was refused and a letter came back saying that "unfortunately on this occasion, your credit score was not high enough". So I sent a letter back basically saying, "I KNOW! I want you tell me WHY!" and I haven't heard from them since (about a month ago). It was funny because in the last letter I received, they said, "If you would like to resubmit your details, I'd be happy to process another request", so I said, "Why should I bother to resubmit my details? My circumstances haven't changed, so why should your answer?"

Woofy - another bank is a fantastic idea and seeing as I live in a Post Office and my dad owns it, your suggestion sounds quite convenient! It's definitely a student account I'm after by the way, and I am still a student. A university student, that is, which the bank account is advertised as being "ideal" for.

I don't want an account with HSBC any more, but it's a matter of principle now! I want an answer!

[lisa74656]

I had a problem with Halifax and my old student account i had whilst at college. I wanted to start using them instead of barclays but they would not change my student account into a normal current account. Why i don't know!! I have had problems in the past but everything was paid off a few years ago. I thought that banks would be more lenient with credit as pretty much everyone needs an account nowdays but they seem to be the worst. And i'm still with Barclays! With the credit scoring thing, have you applied for any other credit and been refused? they log every application you make on you file (though don't know if you have access to that) and if you have frequently been refused then that will count against you. I was told that by Halifax.

[IndieSinger]

Nice idea lisa74656, but I have never applied for any loan/store card/credit card so I've never been refused.

Someone suggested writing to a financial ombudsman - does anyone agree or am I barking up the wrong tree?

[BenDToy]

IndieSinger - while I do sympathise, I think in your position I would give up gracefully. From the sounds of it, you have no credit information at all against your name, and in their eyes this may make you a poor risk. Look at it from their point of view. If you owe them money, you have no history of proving your creditworthiness, and you can offer nothing as security (I am assuming you didn't buy the house you moved into). I would put it down to experience, open an account with another bank, and put your energies into more useful activities than a vendetta against a fairly major institution. As a student you must have more useful ways of spending your time. ;-)

[IndieSinger]

I think they're losing out on customers though... advertising a student bank account for students and then saying you can only have one if you've already had at least one substantial debt. I couldn't really class it as a "vendetta" either - HSBC don't want me as a customer and I've politely asked for a reason, which I'm still waiting for. I could understand if I wanted a loan but all I want is somewhere to put my money and withdraw it. As far as I know, the bank won't LET you take out any money once your balance is �0, so why are they concerned about me owing them money if it's physically impossible?

[del_1690]

I have had a hard time with the Halifax myself. I applied for a student account when I was 16 and thought there were no problems. I had an overdraft facility and everything was rosy. I recently tried to get an overdraft extension and was told that my account was not a student account, therefore they could not increase my overdraft. The account type I currently have should not have an overdraft, as this is not allowed by the bank itself. So I applied for a student account and was rejected because, amongst other things, the overdraft I have counts against me because it shouldnt exist on this account. Confused? well.......I am. So halifax gave me the wrong account, an overdraft that shouldnt exist and wont let me extend it because my credit is bad because of this overdraft. I have tried many times to increase this but to no avail. And the bank is at a sticky wicket because they cant take the money off me cos they authorised it, and cant extend it cos theyre not allowed. and cant change my account cos im being rejected. What a bunch of stupid b*******

[IndieSinger]

Blimey del_1690, that's a catch 22 situation if ever I heard one! You'd think the bank would be able to just acknowledge their mistake and write off any "bad credit rating" you have. Maybe that's impossible (by law), though? They should have got it right first time!

[paulz]

Indie - we had similar problems and Nationwide would only give us a cash card [hole in the wall] account. They wouldn't go any further, as we had credit problems - for various reasons in the past. There was a fairly recent Gov initiative to get us all to obtain basic bank accounts [to cut down on benefit fraud, Local Post Offices etc] So I wrote to their [NW's] Chairman, who kindly replied saying they were in the process of setting the very thing up. You get a cash card and D/Debit facilities initially and depending how well you manage the account over time they will upgrade it [when you apply] to Switch or Debit card, cheque book, then cheque card and credit cards too. As for HSBC, they wouldn't even open a kid's a/c for my daughter - who was five at the time - again no reasons given!

[khana]

I used to wirk as a credit manager for one of the big clearing Banks and can confirm that as previouslt stated, its going to be down to the credit scoring system used by HSBC. Effectively, a lot of the information you supplied on your application to open an account are used to provide a rating for the opening of an account. The majority of this is based on positive stability factors such as how long you have lived at your current address, are you employed, will any salary be mandated to the account stuff like that. As you say, as you are a student a lot of it will not apply to you and hence you will not accumalate sufficient points to pass the minimum entry requirements for an account. Your best bet if you still have trouble is to open a savings account as these are normally only a very low score is required to open one and then a little later apply for the account you really want. You will ger extra points for having an existing account, assuming you have not abused it.

[Postie]

Indie, I have to agree with other responders, that your campaign against the HSBC is futile, well meaning though it may be. The simple fact is that the HSBC made more money than "soft Mick" last year and they don't need you whereas you DO need a bank account. Complaints to the Banking Ombudsman will be equally futile, for although the BO is theoretically impartial he is "one of them" and he will see that the HSBC have committed no crime, legally or even morally, they are merely using the powers entrusted to them to protect their shareholders money against the threat of international crime you obviously pose. A simple cash management account for students is the Post Office Easy Access account which your Dad as Postie can give you the details, for more complicated banking requirements I would recommend the Nationwide FlexAccount. The PO account includes Telephone Banking and the NW account includes internet banking.