Every credit union has a slightly different perspective. Some credit unions may never lend to someone who has had a county court judgement in the last three years, whilst others may be willing to look at an application even though there have been difficulties a short time ago. 

The NestEgg policy rules are designed to be flexible in this regard. 

Each credit profile suggests different degrees of lending risk. Those with poor credit profiles will default on more agreements than those with fair or good profiles. 

The Decision Engine provides four risk categories for lending. These are roughly aligned to different credit profiles, although this is configurable. 

For example, you may decide only to lend up to £1,000 for people with poor credit profiles. Using strategy, A your loan policy allows for recent County Court Judgments and some defaults. 

As the value of your loan applications increase, different strategies are applied. Strategy B could be for those with fair credit profiles. In many cases this will typify an applicant who has had trouble but has their payments more or less in order over the last 12 months.  

Good and excellent credit profiles may be reserved for strategies C and D. You may be prepared to lend up to £5,000 for a home owner with a good credit score, but a few missed payments. However, when it comes to your largest loans these might be reserved for those with excellent profiles; no missed payments and good credit scores.
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The greater degree of risk taken, the more paperwork and evidence you may require. But why put someone with a good credit profile through the hassle of providing a bank statement? Do they really need to fill out a full income and expenditure form?

Affordability is an acute issue for those on low incomes and benefits. An income and expenditure statement is a sensible route to take, if Open Banking data doesn't provide the information required. 

Additional paper proof of identity may be required if they fail a credit bureau check. Its inevitable that the application process might be more onerous for those with poor credit profiles. A credit union needs to balance risk and reward. 

But for an applicant with plenty of credit history, asking for a list of existing commitments creates unnecessary friction in the application process. The decision engine will return these details.  

A credit union may, therefore, decide that a lighter-touch application is provided for those with better credit profiles. 

There is no such thing as a credit black list, but banks use a number of indicators to decide that an applicant is a poor credit risk. An individual with a poor (or bad) credit profile will probably have a recent County Court Judgement, lots of missed payments and may have been made bankrupt or have had an Individual Voluntary Arrangement or Debt Relief Order in the last three years.  

Someone with a ‘fair’ credit profile is likely to have had payment problems in the past and missed payments in the last 12 months. However there will be no serious arrears, county court judgements or insolvencies in the last three years. It is likely that someone with a fair profile will be renting, they may have moved around a fair bit and may have only recently started their job.

If someone has no history of borrowing they are likely to have a fair credit profile. 

An individual with a good credit profile is likely to own their own property and have lived at the same address for more than three years. They will have worked for the same employer for a similar amount of time and will have plenty of credit. They won’t have any defaults or County Court judgements but may have missed one or two payments in the last three years. 

An individual with an excellent credit profile is likely to own their own property and have lived at the same address and worked for the same employer for a long time. They will have plenty of credit and will never have missed a payment. 

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