The Herald (Glasgow)

Copyright 1997 Caledonian Newspapers Ltd. May 3, 1997 

SECTION: Pg. 24 

LENGTH: 1907 words 

HEADLINE: When your money isn't good enough; Being comfortably off doesn't

guarantee you'll get credit. Here's what to do if you're turned down

BYLINE: By Alexandra Henderson 

BODY: 

CREDIT REFUSAL HOW would you feel if you were refused credit? What if you applied for interest-free terms to buy a washing machine or carpet, or for a credit card or bank loan, and, despite having a good income and no previous financial problems,you were turned down? That is exactly what happened to one Herald reader recently.

She earns almost £30,000 a year and has never missed a payment on her mortgage, car loan or credit cards, yet when she answered an advert in a Sunday magazine for a £200 ring, her application for interest-free credit was refused. She says:

"I was surprised and rather cross at being turned down, but I didn't know what I could do about it, and since I still wanted to have the ring, I just paid by cheque and forgot about it." However, when her application for a NatWest Executive Club credit card was turned down a few weeks later, she became seriously worried.

She explains: "Irealised there was probably a connection. A friend told me that all these companies use the same credit reference agencies, and now I'm worried that I'vebeen blacklisted for some reason and that I won't be able to get credit again." Most retailers and lenders use reference agencies to help them decidewhether to give credit to potential customers.

The agencies gather informationfrom a number of sources, including electoral rolls - used to confirm your address and length of residency - and civil court records showing if any financial judgments have been made against you. 

Often your file will also contain information about existing loans and your payment history. This is provided on a reciprocal basis by various organisations to help others make decisions about your credit worthiness. Your record should also contain a list of the enquiries made about you by firms. 

There are two main UK-wide reference agencies - CCN and Equifax. But, according to Nicki Websper of Equifax, there is no such thing as a blacklist. The decision to grant or withhold credit is, she says, made by retailers and financial institutions based on a credit "score", which they arrive at by combining the personal and financial information you provide on your application with that from the reference agency. "Lenders want to lend money," she says, "but they also want to protect their risk.

There is a sense of responsibility in not letting customers over-extend themselves." Mistakes can occur at any stage of the credit application process, though,as another Herald reader discovered recently when she tried to buy a carpet on interest-free credit. She explains:

"The shop assistant took down my details on the application form and went off to phone, but when he came he said I'd been turned down. "I couldn't understand why and asked to look at what he'd written. It turned out that instead of saying I was retired on health grounds and living on private health insurance, he'd ticked the box that said I was unemployed. It was sheercareless ness on his part.

Once he'd correct that, my application was accepted." If, however, you're turned down for credit and there seems no obvious explanation, the answer could lie with your reference agency file. 

Glasgow's Bath Street branch of the Citizens' Advice Bureau gets around 4500 enquiries a year from people who have been refused credit. And, says assistant manager Robert Mackay, this does not just happen because they have a bad payment record. "They may not be on the electoral register, that's the first hurdle.

Also if you've got no credit at all that can go against you, as lenders say you've got no history. They tend to think everyone uses credit, and if you've not got any that creates suspicion. "An awful lot of people are refused on the basis of the way information iscompiled by address - there could have been a previous default there.

Or the problem could be with a neighbour from the same close or block of flats who'slisted on your reference because they share the same address." Under the Consumer Credit Act, retailers and lenders are obliged to tell you which reference agency they use.

You can then write to the agency, enclosing acheque or postal order for the statutory fee of £1 and giving details of youraddresses over the last six years plus your full name and title, and it willsend you a copy of your file. 

If you find anything factually wrong, you can have it corrected, or if you feel something needs explanation, you can add your own statement of up to 200 words which must then be given to anyone who makes an enquiry about you. 

Business information pro-vider Instant Search has just launched a telephone advice line explaining in detail how this process works. Managing director Anthony Capstick explains:

"We provide reports on companies, figures and credit ratings to businesses, but since we started advertising in the Yellow Pages we've been getting a lot of people ringing up wanting ratings on themselves because they've been turned down for credit. We can't provide those, so we decided to set up a helpline." 

He recognises that mistakes can occur in credit files. "There can be a problem with accuracy. Shops only pay £1 or £2 to a credit agency for a reference, and at that sort of level the agency can't afford to spend too long on it.

I looked up my own wife on one system. She was listed twice with two spellings of her name. That's not a reason to get turned down for credit, but it's an example of how mistakes can be made.

Thousands of people in this countryhave got the same name as each other, and that can cause problems." The reader who was refused credit by the jeweller and by the NatWest is hoping a mistake of this type will explain what happened to her, and is writing to both CCN and Equifax to discover what their files on her contain. 

At the end of the day, though, it is up to the retailer or financial institution to decide whether to lend.This may have nothing to do with what itsays in your file, and the company is not obliged to tell you how it reached itsdecision.

Anthony Capstick points out: "Everyone employs their own criteria on which they will extend credit. They may decide, say, that they don't want to lend to someone who has not lived at the same address for three years." In cases like this, Robert Mackay of the Citizens' Advice Bureau advises that people simply shop around.

He stresses: "Different lenders make different types of decisions, and there are some prepared to lend even to bankrupts who have been discharged.

You would pay more in the long-run though, as this is more expensive credit." However, it can be counter-productive to make too many unsuccessful applications.

Mackay cautions: "Every time that you apply for a loan and someone does a credit search that's put on your reference. If you've been going the rounds of lenders each one will be registered, but it won't show if you got the money or not, so lenders who see your file may think you're piling up loans that you might not be able to repay." So if you've been refused credit for no apparent reason, the moral would seem to be: if at first you don't succeed, try again - but not too often.

The Office of Fair Trading publishes a leaflet entitled No Credit? oncredit refusal. It explains how to check and, if necessary, amend your referencefile. For a free copy contact the OFT at PO Box 172, East Molesey KT8 0XW; tel:0181 957 5083.

The Instant Search credit reference advice line is on 0991 190020. The tape lasts for four minutes and calls are charged at £1 a minute. 

To check your credit files, write enclosing £1 to both Consumer HelpService, CCN Group, PO Box 40, Nottingham NG7 2SS, and to

The Consumer AffairsDepartment, Equifax Europe, Department 1E, PO Box 3001, Glasgow G81

payment methods such as interest-free credit, store and other credit and debit cards are popular with many shoppers.