View more on these topics

Scorecards are not there just to annoy


Some people would have you believe that lenders that use scorecards are making life difficult for brokers by inferring that scorecards decline good borrowers who would otherwise be accepted.

While this may be a convenient marketing story, it is not actually the case. I have worked for lenders that use scorecards and ones that do not and my view is that they both have their pros and cons.

A properly functioning mortgage market should offer brokers and borrowers choice. Scorecards are designed to underwrite cases be it mortgages, credit cards or insurance policies.

They use empirical data built on the behaviour of thousands of borrowers and assess the willingness of a borrower to repay their debts. A good quality mortgage borrower is just as likely to be accepted by a scorecard as it is by an underwriter.

In fact, a scorecard does exactly the same job as an underwriter, just in a different way.

One reason why brokers would welcome scorecards is that you get consistency of decision. Scorecards don’t have bad days, they do not get distracted, they do not change companies – they just do their job.

On the flip side, an underwriter can take a view on a case if it is below the credit quality the lender would normally accept.

Complexity of income has nothing to do with scorecards as this is based on the lender’s lending policy. Next week, this column will attempt to explain how lending policy and scorecards interact.



Lenders’ margins on mortgages hit a two-year high says the margin between mortgage rates and the cost of funding to lenders via swap rate markets is at an all-time high.Two years ago the margin on a two-year fixed deal was 1.28%, compared with 3.29% today. Michelle Slade, spokeswoman for Moneyfacts, says borrowers will be angry at this news, especially at the government-backed […]

We need to save the public from banks’ grasping tentacles

One of the debates on Mortgage Strategy Online last week was how the future would be with brokers charging a fee for advice instead of a proc fee. In my experience borrowers are usually mortgaged to the hilt and are likely to be unable to pay a reasonable fee to get advice, thus throwing themselves […]

Passport - thumbnail

Thinking of expanding overseas?

Whether you’re a small company or an established larger employer, expanding overseas into emerging markets can be an extremely attractive prospect for growing your business. However, with this comes a duty-of-care requirement to any staff based overseas.


News and expert analysis straight to your inbox

Sign up
  • Post a comment
  • Gray Haired Underwriter 27th August 2010 at 1:58 pm

    I am well used to Mr Cleary’s support for the scorecard system and I can agree with some areas of his arguement but credit scoring will always have the same fundamental weaknesses in that:
    1) it assumes that all people behave the same way.
    2) It is an attempt to put people into boxes and if they don’t fit they are rejected.
    3) It works off historic data and in a recession it has always been found to be wanting

    I saw the shortcomings of scoring in 1990/91 and am witnessing them again. The very old GIGO adage about computer systems springs to mind – garbage in garbage out i.e. If there is no-one skilled enough to check what is going in to the system then you get the result you deserve.


Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now