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The credit blacklist myth

It has never seemed easier to borrow money, so if you do get turned down, the obvious question is “Why?” swiftly followed by the nasty suspicion, “Maybe I’m on a credit blacklist.”

The good news is that you're not. In fact, there’s no such thing as a credit blacklist. But there is a host of reasons why you might be rejected.

Your credit report has worried the lender. This unique, personal record of your credit history could show that you already have a number of loans and the lender may be worried that you will not be able to repay another. You will also find advice that will help you to improve your report. Click here for a free copy of your credit report from Experian

You may not fit the lender’s profile.For example, a credit card issuer may only give cards to people who already have fewer than three, or a mortgage lender may specialise in first-time buyers.

You are a non-standard credit risk. According to Datamonitor, the independent market analyst, more than one in five adults in the UK are deemed non-standard. They may include the self-employed, others who cannot provide sufficient proof of income and people who have an outstanding county court judgment (CCJ) against them or have had their homes repossessed for non-payment of mortgage.

You move around. Credit companies look for stability – for example, living at the same address for at least three years or having a long-term relationship with the same bank. So, if you move around a lot or switch banks often, this may tell against you.

Your credit score wasn’t high enough. Lenders generally base their decisions on a credit score, which they calculate using the information in your credit report and your application. Every lender has a different formula which can even vary from one type of loan to another. To get an idea of how lenders may regard your application you can become a member of CreditExpert and order your National Credit Score for just £4.99. It is based only on the information in your Experian credit report, so it will not be the same as the one generated by a lender, but it will give you a good idea of what they may think.

WHY CHECK YOUR CREDIT REPORT?

If anything in your report is out of date or gives a misleading picture of your willingness or ability to repay a loan, mortgage or credit card, it can affect your chances of getting the best deals. It can even lead to outright rejection by lenders.

For example, you may have separated from a partner who has since run up debts but, because you have still got a joint account, his or her payment behaviour could be affecting you. You won't see their credit data on your report but you will find a note of any financial association.

Or you may have shopped around for the best offer, without realising your enquiries have been registered as multiple applications. These should show as quotation searches. If they are down as applications, lenders could think you are desperate for money, have over-extended yourself or even that a fraud is being planned.

You could even discover applications and credit accounts in your name that you did not ask for. In that case, your identity may have been used fraudulently.

The easy way to check your credit report is to log onto CreditExpert, the credit monitoring and identity protection service from Experian. If you find anything you disagree with or would like to clarify the circumstances surrounding an entry, CreditExpert will help you to put the record straight. Click here to find out more