Tuesday, July 23, 2013

Getting Credit (and how some places don't link information)

The most annoying thing about going to a new country is having a lack of credit.  Lack of good credit means it is hard to get a credit card, mortgage, or do other things.  Thus, whenever I have moved to a new place, I have tried my best to figure out how to improve my credit quickly.

My first credit card of my own (not some supplementary card from my parents) was an American Express or Amex Blue Card.  The reason why I got it?  It looked cool.  It had a blue square in the middle that glimmered in the light.  That was really it- whatever marketing whiz Amex had sure worked wonders, as a poor student that’s I really wanted. 

I also remember credit my first credit line too, all of $600 per month.  Not really much, but it was a start.  I figured since I had no credit history, as a student in college that’s one of the best times to get credit, as credit card companies are very much willing to lend to you at that point.  Once you start working with no credit it becomes much harder, and you have to open up a secured credit card.  I’ll save that for another session.

And so I used my card, whenever I could, (in college there isn’t that much to buy, well at least you don’t know yet), so sometimes I would go close to the limit, otherwise sometimes not.  If I did near the limit I would pay off the balance early, thus doubling the amount of credit available if I paid off the balance in the middle of the month, as it only took a day or two to clear the transaction.

I was slowly building credit, from $600, to $1,200, to $3,200 over the years (asking for a raised credit line, or sometimes they automatically did it), and then at some point I got a credit line for that card to buy a decent second hand car.  

Having a large limit, but only use a small amount of it (say 10%-20%) then started really helping my score.  Because I wasn’t anywhere near my credit limit, I was rewarded with a very high score.   And thus it was linked to my social security number, so every place I moved, the score came with me, and when I went to check my credit score it linked my number to all my cards, and I could see a complete picture of my credit history.

Fast forward to the UK, coming here and having to start all over building credit.  I already did have a bank account, and had a mobile phone bill throughout the years.  However, here’s the interesting part- for whatever reason the UK accounts don’t link via a ID number—the national insurance number, the most similar to a social security number in the USA as a single number assigned to a person is not used for credit. 

What you say?  It isn’t used.  So basically if James Smith opens up an account at one bank, and opens an account at another bank when he moves towns, this isn’t connected.  Yes they do verify address as the metric, but there are different variations of the address people can put, and thus the system is not aligned.  Someone who put Flat 3.8, could show up at Flat 38, or Flat 3-8, or just 3.8 or 38 or 3-8.  So literally many people’s credit reports are filled with these inconsistencies.

I learned about this when I was trying to apply for a new credit card.  I knew I didn’t have that great credit, but American Express had let me open up a charge card and a credit card with a pretty decent limit.  I don’t know what system they use, but I put in my USA credit cards, and my HK Amex cards as “other” cards I had, and they must of matched it and seen I had excellent credit, and thus were able to port my credit history to the UK and give me a good limit (yay!).  That’s the way business should be done, and although sometimes I get frustrated at the service, generally as a customer I think they are the best card out there (though I’m sure merchants would disagree).
But I digress—when opening up a new non Amex card, they had to check my credit history.  And then I was denied.  No good reason given.  So thus I decided to figure out my credit score.

Unlike in the USA, where there is My Fico, where you get your three credit scores from the credit bureaus (Experian, Transunion, and Equifax), in the UK Experian seems to be the only big one.  (Transunion is the one in Hong Kong).  Anyway, because they don’t link accounts to my National Insurance number, they actually have to use my addresses, which because of the complications mentioned above, was filled out differently, and thus they were not able to match my accounts.  Someone had to manually match up 3-8, 3.8, etc, and past addresses.  Even then that took several days (as in I had to call in every day for a week).  First was matching this account, then telling me the bank had the details wrong (as in not the order that they wanted), so I had to go to the bank and change it.  They then put my account on, only for it to disappear in a couple days, while my credit score was ping ponging from poor to fair and back. 

Oh and by the way they don’t have toll free numbers like they do in the USA.  So you have to spend MORE money to rectify the problem that they should of dealt with ages ago.  Spending 20 min talking to them can quickly add up, which goes against good quality service.  Experian gives you 30 days trial free, but with the amount of pain it takes to actually set things up, and for them to merge all the accounts and find them to put them in one view, will probably take more than 30 days given the inefficient system.  Even the people on the line mention that “it would be good if we used National Insurance numbers”, but for some reason I don’t know (maybe privacy?) that doesn’t happen, so my account can’t be updated with all my accounts.

When applying for a loan/credit card/mortgage, Experian says that creditors have access to all your credit history, and thus can make an informed decision.  I don’t believe that.  If Experian can’t even get the data right for the customer, how on earth are they going to get it right for the creditor? Even if the creditors have all the data, they would have to piece together all the information there, including the different addresses, realizing that 6-7 variations were all the same address, and many cards were not linked.  Do you really think the person approving your credit is going to spend hours (like I did) trying to make sure that every account linked up and was showing on the credit report?  I think not.

So on to my rant, its more about the system than anything else.
1.     That nothing is linked to a unique number, that allows credit bureaus to easily put all the information together
2.     The lack of toll free numbers to call (so a customer has to pay in order to fix a problem – even though Experian should have had it sorted)
3.     How they have to have a certain format in order to match accounts, and can’t really get a complete picture if your account within 30 days (thus making the 30 day free trial useless)

If Experian could fix these things, that would make all our lives so much easier.  

1 comment:

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