4 ms·

The problem of lacking credit history has been around for a long time, I remember getting a credit card, which I paid off in full every month, just to increase

The problem of lacking credit history has been around for a long time, I remember getting a credit card, which I paid off in full every month, just to increase my credit score ~ 20 years ago. For people without a good credit history in the UK there is meant to be "basic bank accounts" which don't require credit checking as they don't offer overdrafts (https://www.moneyhelper.org.uk/en/everyday-money/banking/basic-bank-accounts https://www.moneyhelper.org.uk/en/everyday-money/banking/bas...) That said, you will still need proof of identity/address. If a bank is taking you on without those, I'd struggle to see how it's meeting KYC (Know your customer) requirements.

Nextgrid 4y ago
As far as I know the aforementioned banks merely check for a credit bureau record (and absence of any fraud markers) to use for KYC as opposed to for credit eligibility, so if he's being rejected for those his problem is not creditworthiness but the complete lack of CRA record. It's unlikely he'll qualify for any credit card with absolutely zero records. His best bet is to open an account at a brick & mortar bank which will be able to verify his identity using physical documents and not only skip the CRA check, but actually create a CRA record (which can be a good or bad thing depending on your opinions regarding privacy). After a year or so, he should become eligible for those accounts accounts (if the lack of CRA record is truly what caused them to reject initially) and even qualify for a credit card if needed.
- jozvolskyef 4y ago
  Thank you for your insightful comment explaining how the CRA process works. I'm not interested in credit, but it is good to know that it takes a year merely to qualify for a score. Last year, I stuffed every document I owned into a folder and went to a brick & mortar bank to open an account. No dice. The customer adviser went through some kind of a decision tree and told me that my best bet is to apply for benefits if I am eligible, saying that I just need to show them some letter without claiming the benefit. It is absurd. If wearing an ankle tag for a month to prove my address was an option, I'd go with that.
  - Nextgrid 4y ago
    > but it is good to know that it takes a year merely to qualify for a score. Technically it doesn't - banks leak your details to CRAs upon every major interaction (account application, etc) and regularly confirm them if they have a continued relationship with you (if you have an account open they'll typically report the status of the account every month). However other banks may still be suspicious of a brand new record and might want to wait a few months before trusting it (since if the record was created fraudulently, it will usually get discovered and rectified pretty early - if the record is there for a long time, either it's legit or the fraudster has done an above-average job). The "one year" number is purely arbitrary but feels fair to me, that's probably what I'd do if I was building such a system (though I'd also build an escape hatch to allow people to confirm identity differently without CRA scum being involved). Furthermore, in the UK there is no concept of "credit score". It's a myth perpetuated by the CRAs just so you obsess over that meaningless number that they can tweak every month to give you a reason to keep coming back and look at their "offers". In the UK, lenders get your raw report (aka identity, address history, recent credit applications and their status, open accounts, etc) and then make a decision internally based on their own algorithms.
- raesene9 4y ago
  The page I linked gives that info for the UK :) including alternative identity proof where traditional information might be lacking. The page also lists the banks which provide the "basic bank account" service, which scanning down them appear to be primarily traditional ones (although with branch closures in the UK that's getting less like bricks and mortar by the year.)

Nextgrid 4y ago

As far as I know the aforementioned banks merely check for a credit bureau record (and absence of any fraud markers) to use for KYC as opposed to for credit eligibility, so if he's being rejected for those his problem is not creditworthiness but the complete lack of CRA record. It's unlikely he'll qualify for any credit card with absolutely zero records. His best bet is to open an account at a brick & mortar bank which will be able to verify his identity using physical documents and not only skip the CRA check, but actually create a CRA record (which can be a good or bad thing depending on your opinions regarding privacy). After a year or so, he should become eligible for those accounts accounts (if the lack of CRA record is truly what caused them to reject initially) and even qualify for a credit card if needed.

jozvolskyef 4y ago
Thank you for your insightful comment explaining how the CRA process works. I'm not interested in credit, but it is good to know that it takes a year merely to qualify for a score. Last year, I stuffed every document I owned into a folder and went to a brick & mortar bank to open an account. No dice. The customer adviser went through some kind of a decision tree and told me that my best bet is to apply for benefits if I am eligible, saying that I just need to show them some letter without claiming the benefit. It is absurd. If wearing an ankle tag for a month to prove my address was an option, I'd go with that.
- Nextgrid 4y ago
  > but it is good to know that it takes a year merely to qualify for a score. Technically it doesn't - banks leak your details to CRAs upon every major interaction (account application, etc) and regularly confirm them if they have a continued relationship with you (if you have an account open they'll typically report the status of the account every month). However other banks may still be suspicious of a brand new record and might want to wait a few months before trusting it (since if the record was created fraudulently, it will usually get discovered and rectified pretty early - if the record is there for a long time, either it's legit or the fraudster has done an above-average job). The "one year" number is purely arbitrary but feels fair to me, that's probably what I'd do if I was building such a system (though I'd also build an escape hatch to allow people to confirm identity differently without CRA scum being involved). Furthermore, in the UK there is no concept of "credit score". It's a myth perpetuated by the CRAs just so you obsess over that meaningless number that they can tweak every month to give you a reason to keep coming back and look at their "offers". In the UK, lenders get your raw report (aka identity, address history, recent credit applications and their status, open accounts, etc) and then make a decision internally based on their own algorithms.
raesene9 4y ago
The page I linked gives that info for the UK :) including alternative identity proof where traditional information might be lacking. The page also lists the banks which provide the "basic bank account" service, which scanning down them appear to be primarily traditional ones (although with branch closures in the UK that's getting less like bricks and mortar by the year.)