Bank Searches Wrecking Credit rating

[NOX]

Hi I'd like some advice please for my son. He's 18 and in March set up a business which is going very well and will have an estimated turnover of £250,000 by the end of the financial year. He has done this from scratch from his savings with absolutely no help from Nat West with whom he banks. All they did was open him a business account with no facilities at all except a cheque book, no overdraft and no business loan. Fair enough.
He recently applied for an overdraft and was declined. Thinking this was odd because he doesn't owe anyone anything and he's turned over a lot of money with them with no hiccoughs he looked online at his equifax report and to his surprise found it was ' very poor.'
Everything on it was perfect, excellent in each department EXCEPT 'previous searches' where Nat West have searched his credit file 6 times in the last few months thus rendering it 'very poor'. He has not applied for anything with NatWest since they've been so bl00dy unhelpful anyway, so why would they search his file so many times and assasinate his credit rating?
Naturally we're going in to see them and want an explanation on Monday but does anyone else have any experience of this, as I'm at a loss as to what to think or why they have done it ( or even if they are allowed to do it given he's not applied for anything). Any advice very welcome.

[NoMercy]

The only advice i can give is that natwest are a shower of Sugar. I once tried to withdraw 10k from my business account but the teller made me go all the way home to get my passport even though she had known me all my life. Find another bank.

[237SJ]

Do you know for sure that it`s the fact they did six searches that rendered him very poor? The only think I can think is that because he is so young, he hasn`t got a `history`. When I got my first current account and cheque book, my bank wouldn`t give me a cheque guarantee card because they didn`t know anything about me. I had no history so they didn`t know what kind of liability I could be. They changed their mind when I threatened to go to another bank though.

[hc4361]

His credit rating is very poor because he has no credit history.

[NOX]

Thanks for the replies. He does actually have a credit history though albeit only since he's been 18, he has several business mobile phone contracts, varying insurances etc and a credit card ( not through the bank) all of which are always paid on time and his credit card is only nominally used. He did this to build a credit rating. All other areas are showing as 'excellent' in his credit score except 'previous searches' which is showing as ' very poor. His brohter who is a year older at 19 granted has a similar financial history and his credit rating is 'very good', so yeah I really do think it's NatWest making searches against his name for whatever reason.Total a75es.

[Twenty20]

It really depends on how much overdraft he was asking for? If it was only £100 or so, I couldn't see there would be a problem. If he was after several thousand then they, probably quite rightly, turned it down.

Quoting a turnover is pretty much irrelevant, especially an estimated one. Is the business profitable so far? - it's relatively easy to turn over a lot of money, but making a profit is the important thing. He will also, presumably, have no accounts to show as he's only been trading 6 months. Maybe the bank don't agree that his business plan will show a turnover of £250,000 and that he'll make some profit out of it.

If the business is going so well after only 6 months, I expect the bank would be asking why he needs an overdraft when he didn't previously.

As to why they've searched his credit history, such as it is, so often is a question only they can answer.

Does he have a business advisor at Nat West? They usually give you one when you start a company and bank with them. Ours was actually quite helpful and would have answered this sort of thing on the phone without needing a meeting. In fact an application for an overdraft or credit/debit card, loan etc would have gone through them and not through the branch. We've moved away from Nat West now to one of the 'free' banks but have to say they did give decent advice when we were starting off.

[jno]

this probably isn't very relevant, but jno jnr had a credit problem a while back and people offered some suggestions

http://www.theanswerb...e/Question983923.html

[NOX]

Thanks for the reply twenty:)
Yes he's showing a very good profit, the total profit at years end is likely to be in the 30% margin after all things are considered and at the moment that's roughly where he is. He wants an overdraft ( quite rightly in my opinion) because he's opened a second branch, has vast swathes of expense in the form of advertising etc ahead and yet again is doing all this without any help from the bank and would really like just a little faith repaid to him for choosing Natwest. The business manager agrees that it's a good business, working well etc, but isn't the brightest person I've met tbh and certianly not anyone I'd like to be in charge of my business needs. It's pretty frustrating and I'd certainly advise him to jump ship to somewhere that appreciates his custom a little more, but I was wondering more if anyone knew WHY they would have credit checked him without him wanting any credit from them in the first place, and if they can legally do this, because I have a feeling they can't. Anyone know?

[NOX]

Thanks Jno, did your son get it sorted out eventually? It's very frustrating that young people trying to do things properly are getting no help whatsoever from financial institutions and in fact are being hammered down. I'd like to see some genuine help to get the economy moving instead of quantative easing which will never trickle down to small business in a million years.

[boxtops]

NOX, IMO it's your son's age, plus the fact that he doesn't use his credit card so has built up no credit history of being a reliable repayer, which is rendering him as a poor risk. It's because he doesn't owe any money, has no rating with anyone else, that the bank see him as a big risk - based on his past history they have no way of knowing anything about his spending habits, reliability, etc. Mobile phone contracts and insurances don't really count for his except in a very small way - the credit rating people search on loans and credit and store cards mostly.

I don't believe that conducting searches six times will affect his credit rating wtih Experian etc - I ask them to provide a report for me quite regularly and the number of times you get searched doesn't affect it (or doesn't appear to). What would affect it is if other companies were searching in order to advance him money or give him a credit card, then declined him.

I went to see my own bank on Friday and as part of the conversation, they explained the calculations which the banks use to work out riskworthiness, and much of it is about the way people manage their finances - they can have debt but if they are managing it, it is good in the bank's eyes. I'm almost certain therefore that it's because your son has no history, that he's a poor risk - not the other way around.

[boxtops]

Another thought (seeing your post while I was typing) - he might be better off asking for a business loan (against his business case) rather than a personal overdraft - since the money's to be used for his business. It could be a better way forward, which keeps his personal finances then separate from the finances for the business.

[jno]

Nox, yes, I *think* the problem was confusion over his addresses and in no way his fault.

You probably know all this already but here's the Martin Lewis guide

http://www.moneysavin...t-rating-credit-score

[boxtops]

Thanks jno, I've bookmarked that site - very useful.

[NOX]

Maybe Boxy, and that's what I assumed initially but that still doesn't make sense when you compare it to his brother's whose less than 12 months older than him and has very similar financial habits and is 'very good'. Here's what it actually says on his report regarding the searches by Natwest:-

Previous Searches
Very Poor

You have had 6 search(es) for credit in the last six months. Credit grantors view more than one or two searches within six months very unfavourably. Please review the section of your credit report entitled Previous Searches . For more information about credit searches and what you can do about them, click here .

Searches at your current address: 6


(and this is the indicative of most of the rest:-)

Credit Agreements


Excellent

You have 4 active accounts and no settled accounts on file at your current address. Credit grantors prefer that you have at least one or two accounts as part of your credit profile. Active accounts are preferred to settled accounts.

Good

Your oldest account is 1 year(s) 1 month(s) old. Credit grantors like to see at least 12 months of credit history. Click here for information about how you can build up your credit history.

Excellent

You have no derogatory items in your payment history.

Excellent

All payments on your accounts are up to date.

Excellent

Credit reference agencies are receiving periodic updates from your credit grantor(s) that reflect you have made payments on time in the past.


etc etc etc.
his brother's reads exactly the same minus the naff bit about 6 searches and his score is 'very good' so you can see where I'm coming from?

[NOX]

Thanks Jno for that link and everyone else for your help, I'll let you know what they say on Monday:)

[boxtops]

Yes, I can see what you mean, NOX - although further down it does confirm what I thought, that having no active accounts makes it difficult for the potential lender to know anything about repayment habits etc.

You can always appeal against a credit report by saying to Equifax that all 6 searches were NatWest - if they corroborate this, the report can (I hope) be rectified. I've done this in respect of incorrect info on my report - I did mine through Experian - and they rectified it quickly.

Good luck on Monday, let us know how you get on.

[Andyvon]

Hi NOX,

I was so unimpressed with NatWest when I had a business that I just cancelled my accounts and went elsewhere. There's no need for details but I found them so unhelpful that I actually wondered if they were being obstructive on purpose. If I wanted to borrow money over three months to buy a car (which I had to do for tax purposes) they put so many obstacles in the way - despite them knowing that I had many more times that amount in various business and personal accounts with them!

In the end I closed all my accounts and opened business and personal accounts with Barclays and Lloyds. I had no trouble at all with them. (When I used £800 cash to close one account with the NatWest I didn't bother to get a receipt. They wrote to me three days later saying they understood I wanted to close that account but they never received any money! I hadn't bothered to get a reciept - so i had to pay them another £800 to get rid of them!)

[NOX]

Yeah I'm hearing you there Andy, that's absolutely dreadful. Tbh I feel really sorry for him, as they certainly seem a mix of incompetant, dim and unhelpful - none of the things you need when you're starting out in business. I just want to know why you'd credit check someone whose not applying for credit, because I'm fairly sure you have to actually apply for somthing to be credit checked- and this will affect his file apparently for between one and two years- which is just brilliant:(

[boxtops]

NOX, your son IS applying for credit, he's applying for an overdraft - which is, in effect, the bank lending him money against his account. I would expect this to be normal practice. I went to see my bank last week about a financial review and the first thing they ran was a credit check to see whether they could offer me anything.

[NOX]

Yes ONCE boxy, last week, not before, one credit check is niether here nor there, but SIX when he's applied for SFA ( and on two dates when he wasn't even in the country so couldn't have applied for anything) is taking the p155 to be honest, and it's a business overdraft not a personal one anyway- what's the point of having a business manager if they're unable to make their own decisions about granting a small overdraft, you might as well just have people only able to apply online. He's really furious as he wanted to buy a house in the spring and this will affect him for upwards of 12 months. What an absolute joke.

[boxtops]

I can see your point, NOX. I hope you can get some sense out of the bank tomorrow - but as others have said, NW doesn't seem to have a good track record. It might be worth moving his account elsewhere if you get no satisfaction.