Introduction
Research from NestEgg shows that people who have applied for credit three or more times in the last three months tend to have high balances on their credit cards. This is an important factor for lenders who are considering whether to approve someone for revolving credit.
When someone has made a lot of credit searches recently, it might mean they've been trying to get a consolidation loan. If they've been turned down before, it's a clue that they might be applying again now.
Similarly, if they were recently approved for a consolidation loan but are now applying again for another loan; it could indicate that they are experiencing budgeting difficulties.
Search rules
The Decision Engine dashboard includes how many searches someone has made in a certain time period, and also information about who they applied to (the type of creditor) and how much money they asked for. Therefore we are introducing two additional rules that will flag loan applications where there have been a certain number of searches over a set period of time.
The standard rules are:
REF22: Flag if there have been 3 or more searches in the last 3 months.
REF23: Flag if there have been 3 or more searches in the last 12 months.
Rules can be adjusted by changing the variables highlighted in bold above. For example, we could change REF22 so that it only flags if there have been 2 or more searches in the last 2 months.
We cannot review a person's search history beyond 12 months.This is because the credit data limits retention of this information for one year.
Information returned
In the recent searches table you will see what:
Org Type: Type of org/company the searcher is, please see here for a full list of company types
Own: whether or not the search was performed by your organisation
Credit type: the type of credit / account type. You can check a full list of account types here
Search purpose: for what reason the search was performed. Please see here for a full list of search purposes
Search date: the date of the search
Is the applicant borrowing from other Credit Unions?
With the details available in the recent searches table, it is now possible to identify when a member is applying for credit with other Credit Unions!
For example, in the table below you can see that the applicant has applied for credit:
7 times in the last 12 months.
6 times to a Credit Union and once for a credit card.
What’s interesting about the 6 Credit Union applications is that only 2 of them are flagged as “own” meaning the 4 other applications may have been made at other Credit Unions.
Important to note:
If your credit union works with different credit reference agencies, some searches listed in this table might say "no" in the "own" column when they were performed using a CRA other than Trans Union. Therefore , it's a good idea to double-check if the search was actually done by your Credit Union, if you work with multiple agencies.