Post by james on May 17, 2015 0:44:47 GMT
Here is how Zopa describes the searches that they do to prospective applicants. Nothing mentions, implies or hints at any searches being carried out after an application has been resolved:
"Zopa's credit checks
Zopa uses two types of credit checks depending on how far you progress in the loan application process.
The same information is checked at each stage and all loan providers use a similar process to determine the APR you are offered.
This means that if you are offered a Zopa loan quote you are unlikely to find a significantly better rate elsewhere."
(lets leave aside the false claim about being unlikely to find a significantly better rate elsewhere, because most successful Zopa applicants probably can do that))
"Getting a loan quote
To give you a loan quote we check your credit score with a Quotation Search (also known as a soft search).
This type of search does not affect your credit score and is not visible to other credit providers such as banks. But it will be visible to you if you request a copy of your credit file.
The Quotation Search allows us to quickly check whether you can afford the loan and to offer you a competitive rate.
We use the credit bureau Equifax to do this search."
"Applying for a loan
If you submit a loan application to Zopa we will do a Credit Application Search. This type of search will appear on your credit file.
The Credit Application Search allows us to confirm that you can afford the loan and that you meet our criteria for borrowing. It is the same type of search that is done by banks and other loan companies.
The credit bureaux we use are Equifax and in some cases Call Credit for additional information. The Credit Application Search is visible to your other credit providers. Any impact on your credit score will be positive, as long as you make all of your Zopa loan repayments on time."
So far as I can see there is no disclosure at all of any checks that may be carried out after an application, hence no permission to carry out such searches.
There's also a clear false claim that any impact on credit score will be positive, since an application has a negative effect on credit score initially and the ongoing credit will have a sustained reduction until that is overcome by the repayment record, which it may never be if the borrowing to income ratio is high enough.
In the Principles there's this:
"1. If you want to borrow through the Zopa Markets, you will have the opportunity to post Indicative Bids specifying your Borrowing Criteria.
3. By posting Indicative Bids, you agree:
...2. to us checking your Credit Rating and the Information you provide us to assess the affordability of your Repayments. You acknowledge that credit reference agencies link together the records of you and anyone that you have advised is a financial associate (e.g. someone with whom you have a joint credit account) including previous and subsequent names of parties to the account. Links between financial associates will remain on your, and their, credit reference files until such time as you or your partner successfully files for a disassociation with the credit reference agencies. When assessing the affordability of your Repayments, we may take into account Information about your financial associates in your credit reference. "
and:
"General Operational Purposes
3. We as data controller may use your Personal Information for: statistical analysis; to develop and improve our products; to update your records; to identify which of our, or others', products might interest you; to assess lending and insurance risks; to arrange, underwrite and administer insurance and handle claims; to identify, prevent, detect or tackle fraud, money laundering and other crime; to carry out regulatory checks; keeping you informed about your lending or borrowing and for market research."
The closest thing there seems to be "statistical analysis; to develop and improve out products" but not even a hint of seeking permission to do it in an ongoing way for those who have been declined for credit.
So for the reasons above it seems that Zopa is misleading applicants about the credit searches that will be done and their effects.
"Zopa's credit checks
Zopa uses two types of credit checks depending on how far you progress in the loan application process.
The same information is checked at each stage and all loan providers use a similar process to determine the APR you are offered.
This means that if you are offered a Zopa loan quote you are unlikely to find a significantly better rate elsewhere."
(lets leave aside the false claim about being unlikely to find a significantly better rate elsewhere, because most successful Zopa applicants probably can do that))
"Getting a loan quote
To give you a loan quote we check your credit score with a Quotation Search (also known as a soft search).
This type of search does not affect your credit score and is not visible to other credit providers such as banks. But it will be visible to you if you request a copy of your credit file.
The Quotation Search allows us to quickly check whether you can afford the loan and to offer you a competitive rate.
We use the credit bureau Equifax to do this search."
"Applying for a loan
If you submit a loan application to Zopa we will do a Credit Application Search. This type of search will appear on your credit file.
The Credit Application Search allows us to confirm that you can afford the loan and that you meet our criteria for borrowing. It is the same type of search that is done by banks and other loan companies.
The credit bureaux we use are Equifax and in some cases Call Credit for additional information. The Credit Application Search is visible to your other credit providers. Any impact on your credit score will be positive, as long as you make all of your Zopa loan repayments on time."
So far as I can see there is no disclosure at all of any checks that may be carried out after an application, hence no permission to carry out such searches.
There's also a clear false claim that any impact on credit score will be positive, since an application has a negative effect on credit score initially and the ongoing credit will have a sustained reduction until that is overcome by the repayment record, which it may never be if the borrowing to income ratio is high enough.
In the Principles there's this:
"1. If you want to borrow through the Zopa Markets, you will have the opportunity to post Indicative Bids specifying your Borrowing Criteria.
3. By posting Indicative Bids, you agree:
...2. to us checking your Credit Rating and the Information you provide us to assess the affordability of your Repayments. You acknowledge that credit reference agencies link together the records of you and anyone that you have advised is a financial associate (e.g. someone with whom you have a joint credit account) including previous and subsequent names of parties to the account. Links between financial associates will remain on your, and their, credit reference files until such time as you or your partner successfully files for a disassociation with the credit reference agencies. When assessing the affordability of your Repayments, we may take into account Information about your financial associates in your credit reference. "
and:
"General Operational Purposes
3. We as data controller may use your Personal Information for: statistical analysis; to develop and improve our products; to update your records; to identify which of our, or others', products might interest you; to assess lending and insurance risks; to arrange, underwrite and administer insurance and handle claims; to identify, prevent, detect or tackle fraud, money laundering and other crime; to carry out regulatory checks; keeping you informed about your lending or borrowing and for market research."
The closest thing there seems to be "statistical analysis; to develop and improve out products" but not even a hint of seeking permission to do it in an ongoing way for those who have been declined for credit.
So for the reasons above it seems that Zopa is misleading applicants about the credit searches that will be done and their effects.