Three little words. If you've ever applied for credit, you'll be very familiar with them, but, what does "Subject to Status" actually mean?
What does "Subject to Status" mean?
Alongside the usual marketing spiel, regarding the features and benefits of credit products, the phrase "Subject to Status" can seem out of place. However, it appears on every application page and is legally required to be there.
The reason for this is that that credit is not universally available, not everyone applying for a product will be accepted. Indeed, the ability to lend to some people is largely dependent on the capacity to reject those likely to default on their debts. If not, lenders themselves would soon become insolvent.
To determine which applications they will accept, lenders collate information on every applicant, which they apply to their ‘scorecard’. Those who meet the required eligibility criteria (or status) are accepted, while those who fall short are declined for credit.
What information determines my status?
Every lender uses a bespoke credit scorecard and within the lending industry, the scorecard is akin their 'secret sauce'. Each lender has one, and it represents years of analysis, combining customer data, behavioural analysis, and predictive modelling, alongside their predictions for the wider economy (by which their customers' fortunes will rise or fall).
Although scorecards are all unique, and information is weighted differently by each lender, they all tend to leverage a great deal of common information. The information that determines your status includes:
The most important status consideration in the UK is your age. While lenders can, and do, adjust the terms of products to cater for other aspects of your status, they cannot give any ground on the age requirement. In the UK you must be at least 18 years old to be accepted for credit.
Credit file data
In many instances a lender will have had no prior relationship with a potential customer, or they may have served them sometime in the past. In such cases, their information regarding an applicant is likely to be out-of-date, or non-existent. Indeed, even when an applicant is known to them, they may have a very limited perspective on them. Lenders therefore use third party data to help them understand your status.
Credit reference agencies collate and maintain financial records on each and every individual in the UK. Some of the information they gather is publicly available (like your electoral roll record), while other information is sensitive financial data, which they receive from financial institutions (customers accept this data-sharing in the terms and conditions of products, and is a prerequisite for getting them).
With the data lenders obtain from credit reference agencies, lenders can understand;
Lenders want to establish that you will not run off with their money. To do this they look to demonstrate you have an established presence at an address. Your credit file contains mortgage repayments, which can demonstrate you are an owner-occupier. In some instances rental payments are recorded in credit files, but perhaps the best marker of a fixed address is your electoral roll record.
To get on the electoral roll you need to be UK resident, and provide a National Insurance or Passport number. Therefore by using electoral roll data to validate your address, credit reference agencies also validate that you are a 'real person'.
Your credit history includes products and services you currently have and have used in the past, as well as products that you were be declined for. Lenders are often particularly wary of applicants recently declined elsewhere, since they often assume the decision to decline was valid, and based on data they do not have access to.
The products you hold with other lenders, together with the available credit limit, are used to determine your existing level of exposure to credit. Lenders assess this information to determine whether you are over-indebted, or too reliant on credit.
Although willing to offer credit, lenders ultimately want to be repaid. Your repayment history is therefore a primary consideration. If you failed to establish a good payment history you are unlikely to be accepted. This prohibits people declared bankrupt, with County Court Judgments (CCJs), or Individual Voluntary Arrangements (IVAs), from obtaining credit.
Simply living with someone does not constitute a financial connection. But, if you have a shared joint account or mortgage, you will have a financial connection, and this will form part of your wider status. This means people you are financial connected to can harm your chances of acceptance if they have mismanaged their own finances, as lenders assume pooled resources (i.e. if they lend to you, they are lending to your financial connection).
Unless you have an established relationship with a lender (i.e. they are also your current account provider), it can be hard for them to check the income information from your application form.
As such, there can be a temptation to exaggerate your income to increase your chances of acceptance. However, Misrepresenting your income on an application form is fraud (which could result in a criminal conviction), and lenders are not entirely powerless.
Some lenders request to see pay slips, as proof of income, while others cross reference reported income against the payment information in your credit file. With this, they can estimate your likely income, and invalidate your inflated income claims.
What is 'subject' to my status?
Although the phrase "Subject to Status" implies a black and white decision, it is not. Failure to meet the status requirement may result in your application being declined outright. However, just as there is no single status, so different variations of the same product may have different scorecard requirements.
In the UK, people applying for the same product can each be offered different terms, Different introductory offers, different credit limits, and different APRs. Lenders are legally obliged to ensure that a representative 51% of accepted applicants receive the "Representative APR", but beyond that they can offer applicants repriced versions of the same product. As such, status is equally important for accepted applicants as it is for people who are declined.
How do I change my status?
If you are keen to rebuild your status (credit score), read our guide to rebuilding your credit score.
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