Ulster Bank to wipe credit searches on savings account applicants after 'incorrect credit scoring'

Last month we reported that Ulster Bank had been performing hard credit searches – which mark your credit file and are visible to other lenders – on some new and existing customers applying for its table-topping eSavings account, which pays 1.25% AER variable.

This is unusual for a savings account as too many hard searches, especially in a short space of time, can make it more difficult to get credit in future. Such searches are typically reserved for credit card and loan applications where a customer is asking for credit.

Ulster Bank previously told us it had conducted the hard searches to protect the bank and customers from fraud, but it's now admitted it did so in error – and said that this month it will stop performing hard searches on new applicants. To check your credit score, it's worth joining our free Credit Club.

'Working on a large-scale fix'

Ulster Bank's U-turn emerged after a complaint from MoneySaver Adam Croft.

Adam originally contacted RBS, the owner of Ulster Bank, to complain he had been unable to withdraw savings from his account which he urgently needed to complete a house purchase.

He was having problems because the Ulster Bank account requires a card reader to make a withdrawal. This has to be ordered separately through internet banking and some MSE users have reported that readers take up to six weeks to arrive.

Adam's now been given access to his savings and offered £500 as a goodwill gesture – but the response he received from RBS revealed that Ulster Bank had been wrongly credit-scoring applicants.

The letter, from the RBS chief executive's office, admitted that Ulster Bank had "underestimated the interest they would get in the eSavings account".

It went on: "The bank has identified that incorrect credit scoring has been completed for customers applying for the eSavings account where a 'hard search' rather than a 'soft search' has been recorded with Experian.

"The bank are working on a large-scale fix for all customers who have been impacted by this error."

What does Ulster Bank say?

An Ulster Bank spokesperson confirmed that action will be taken to ensure those who have been hard-searched have it removed from their credit file.

He said: "Following feedback from our customers, we've worked to improve the experience for our market-leading eSavings account.

"From 29 September, all new applications for an eSavings account will no longer record a hard search on a customer's credit report, and we will be taking steps to remove hard searches already undertaken for existing eSavings customers."