Despite criticism from some intermediaries, automated systems have brought consistency to decision making and they should not be difficult to understand, said Martin Smith of credit reference agency Callcredit and Tom McLardie, controller of retail underwriting at Nationwide.
“There should be no mystery to underwriting. It involves following a series of steps and there is no hidden agenda,” Tom McLardie said.
Martin Smith explained that the process involves more than credit scoring, with the lending organisation’s basic criteria and affordability issues included, as well as checks for fraud and money laundering.
Translating this into a points scoring system, a lender will consider the application form, the credit score, any internal data, as well as geo-demographic information, in reaching a decision.
Smith did acknowledge that systems can be hampered by poor quality of lack of data. He also said that the acceptance of too many individual case over-rides, will weaken a system by making it less consistent.
