The Risk subtab provides a detailed assessment of credit risk. This helps Loan Officers understand key indicators of credit risk, that will impact a lending decision. This tab provides:
The TransUnion credit score
Presence on the Electoral roll
Search history
Credit Score
Derived from TransUnion, this three-digit number (range 445–770) estimates lending risk.
Credit scores fall into different risk buckets, or credit score profiles:
Below 560: Very poor
560 to 565: Poor
565 to 603: Fair
603 to 627: Good
Over 627: Excellent
Credit score reasons
When assessing an applicant’s credit score, up to four credit score reasons are provided to explain why the score might not be higher. These reasons highlight key factors that adversely impact the applicant’s credit score.
Credit score reasons help Loan Officers identify specific areas of concern. While one factor may not disqualify an applicant, a combination of reasons could indicate a higher risk of default.
This is a breakdown of the four reasons from the example above. These reasons are common for applicants with very poor or poor credit scores:
There are defaults on file:
Defaults occur when an applicant fails to make agreed payments on credit accounts. These are recorded on their credit file and significantly impact their credit score.
Impact: Defaults suggest a higher risk of non-payment in the future.
Time-frame: Defaults remain on the credit file for six years, even if the debt is settled.
Few credit facilities available:
This indicates that the applicant has limited experience managing credit, such as loans or credit cards.Impact: Lenders may find it harder to assess how the applicant handles borrowing.
Consideration: Limited credit history doesn’t always suggest high risk but it does reduce the data available for evaluating a decision.
There have been recent credit application searches:
Recent hard searches occur when a lender checks an applicant’s credit during a credit application. Multiple searches within a short period lower the credit score.Impact: Frequent applications might suggest financial instability or desperation for credit.
Tip: Hard searches are visible to other lenders and stay on the file for 12 months.
Most accounts haven’t been open very long:
This reflects a lack of long-term credit relationships. These relationships are seen as indicators of financial stability.Impact: Long-standing accounts suggest consistency and reliability, while newer accounts lack a proven track record.
Consideration: This reason is common for younger applicants or those new to credit.
Search History
Search History reflects recent hard credit searches conducted on an applicant's profile. These occur when lenders access an applicant’s credit file as part of their loan or credit application process. Hard searches are visible to other lenders and remain on the file for up to 12 months.
Why Search History is Important
Frequent hard searches can signal financial instability or urgent need for credit, both of which may increase the likelihood of repayment issues. However, not all searches indicate risk; they could also reflect shopping around for better loan terms.
What to Look For
A high number of searches:
Three or more hard checks within a three-month period may indicate financial stress. Applicants in this situation could be overextended or struggling to secure credit.Example: An applicant with five searches in two months might be actively seeking multiple loans, raising questions about their financial stability.
Clustering of searches:
A surge in searches over a short time span (e.g., within a week) may suggest urgent borrowing needs or repeated rejections from other lenders.Key Risk: Clusters of searches for high-risk products like short-term loans or credit cards may indicate that other lenders are rejecting applications.
Search Types:
The nature of the credit products applied for is significant. Searches for mortgages or car loans may carry less risk compared to payday loans or high-interest credit cards.
Balancing Search History with Other Indicators
While high search activity can be a red flag, it should be assessed alongside other factors:
A high credit score with frequent searches may reflect confidence in repayment ability and active rate shopping.
A low credit score combined with excessive searches is more indicative of financial difficulty.
Actionable Insights
When search history raises concerns:
Consider contacting the applicant for clarification, particularly if other indicators like defaults or limited credit history are also present.
Cross-check their repayment history and current credit utilisation to evaluate their ability to manage additional credit.
Electoral Roll Status
The Electoral Roll Status indicates whether the applicant is registered to vote at their current address. This information plays a vital role in assessing creditworthiness because it reflects residency stability and aids in identity verification.
Why Electoral Roll Status Matters
Proof of stability:
Being registered to vote demonstrates long-term residency, which lenders view as an indicator of stability and reduced financial risk.
Identity verification:
Electoral Roll records serve as an additional check for verifying the applicant's identity, reducing the risk of fraud.
What to Look For
Registered at current address:
A match between the applicant's credit file and the electoral roll at their current address is a positive indicator of consistency and stability.Key Insight: Applicants recently moved or not registered may require additional documentation to confirm residency.
Length of registration:
Longer registration at a single address often suggests financial and personal stability, which reduces risk.
Not registered:
If an applicant is not on the electoral roll, it could be due to legitimate reasons, such as recent relocation or ineligibility (e.g., non-citizens). However, it may also indicate a lack of stability or gaps in credit file data.
Balancing Electoral Roll Status with Other Factors
While being on the electoral roll is a positive indicator, it’s not the sole determinant of creditworthiness. Consider the following:
An applicant not registered but with a strong credit score and long credit history may still represent low risk.
If an applicant is registered but has recent defaults or high credit utilisation, this should weigh more heavily in your assessment.
Actionable Steps
Request Additional Documentation:
If an applicant is not registered, you may ask for proof of address, such as utility bills or tenancy agreements, to confirm stability.Combine with Other Indicators:
Use electoral roll data as part of a broader evaluation. For example, combine it with search history or repayment performance to build a clearer picture of the applicant's credit risk.
Why Risk Matters
Understanding the indicators in the Risk sub-tab allows you to make informed, data-driven decisions about lending risk. Each element provides a piece of the overall risk profile:
A low credit score with reasons like defaults or limited credit history might indicate an applicant needs closer scrutiny.
Search history can reveal potential financial stress, helping you identify patterns of behaviour like frequent credit applications that may flag higher risk.
Electoral Roll offers insight into the applicant’s stability and assists with identity verification. However, absence on the Electoral Roll should be considered alongside other indicators like repayment history and indebtedness.
By combining these insights:
You can identify higher-risk applicants while remaining fair and consistent in your assessments.
Tailor decisions based on a holistic understanding of the applicant's financial behaviour and credit risk indicators.
For deeper insights, explore our Credit Profiles Guide and Credit Score Reasons.