Credit Blacklist: How to Deal With it

It's not uncommon to hear people talk about getting credit blacklisted.The UK credit blacklist is a suspicion that people have come up with over numerous years to explain why they have been refused credit. Sometimes individuals will talk of being credit blacklisted as they know they have managed sources of credit (such as loans) poorly in the past, other times it will simply be used as an excuse for not taking responsibility for understanding their credit report and knowing their true credit worthiness.

We're going to let you in to a little secret - There is no such thing as a credit black list! Actually, this isn't a secret at all, we are simply dispelling one of the most common myths associated with credit reports and accessing sources of finance or purchasing services.

If you have been refused credit, or still believe that you are on a "credit black list" then you need to take ownership of your credit report, understand the information that appears on it and take stock of the way that credit providers operate. In particular you will need to think about the type of customers that businesses are looking for and whether the information on your personal credit report fits the credit profile desired by these companies.

Things to Consider if You'd Thought You Had Been Credit Blacklisted Include:

Your Personal Credit Report Is A Concern To The Creditor: You may already have a number of existing financial arrangements such as credit cards or loans that you are unable to manage effectively. The data compiled from these sources could indicate to the lender that you may be overexposed and will not be able to make the desired repayments on any other financial arrangements, thus indicating you have a poor credit history. The types of data in this instance fall into 2 prominent categories "White Credit Data" and "Black Credit Data".

Black Credit Data: This financial information details whether you have kept up-to-date with payments, whether there are any issues with repayment (late payments) and whether any defaults have been issued. The fewer items on your credit report that indicate a poor credit history, the better your chances of obtaining credit.

White Credit Data: As of the 1st December 2008; Barclaycard, Capital One, GE Money, HBOS and MBNA will be sharing further credit data on you. In addition to the levels of credit you have available, details on debts, and whether you've missed repayments, they'll include information on your repayment amount (i.e. if it's the minimum, or repaying in full) and whether you've taken a promotional deal.

Since the lenders listed above started sharing this white credit data in 2008, there have been further lenders that have now started sharing white data. In fact, it is now also shared with many other organisations that are involved in the management of credit. This includes sharing information with debt collection agencies if you have missed payments. Creditors are allowed to share this information with other agencies so long as a 'Deed of Adherence' is signed between them and the other organisation in line with the 'Principles of Reciprocity'. Organisations can not share your information for marketing purposes. It is solely for the purpose of managing over-indebtedness, bad debt, fraud, money laundering, debt recovery and debtor tracing.

You Do Not Fit The Profile That The Lender Requires: For example, a credit card issuer may only give cards to people who have fewer than three well managed credit cards (well managed ones that are not on promotional deals). Mortgage lenders may specialise in certain client types such as current home owners (avoiding first-time buyers).

You Represent A Non-Standard Credit Risk Profile: 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.

Every creditor (supplier / lender) will tolerate different levels of risk and price their products and services accordingly. Before applying for credit you should first ensure that your credit profile meets the risk profile that the lender is looking for. If you don't fit in within the credit risk profile that the lender is looking for, then it may be best to search around for creditors that are looking for your risk profile. Otherwise you could find that you get refused for credit and have to make further credit applications (lots of applications does not look favourable on your credit report).

You Change Address Frequently: Credit providers 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.

You Have A Low Credit Score: Lenders generally base their decisions on a credit score, which they calculate using the information in your credit report and your application. Every creditor has a different formula which can even vary from one company to another. A low credit score represents a poor credit history.

Understand How Creditors View Your Personal UK Credit Report

To get an idea of how creditors may regard your credit application you can view your credit score with Equifax or become a member of Experian CreditExpert and then pay an additional amount to view your credit score. These credit scores are calculated using information held by the credit reference agencies (using their own credit formulas), so it will not be the same as the credit score generated by a lender. These credit scores will give you a good idea of what creditors may think.

Credit scores indicate your credit worthiness. This credit worthiness can impact on the interest rate and other terms of a loan. Generally speaking, the lower an individuals credit worthiness, the higher the interest rate of the loan will be (due to risk-based pricing). Also, the higher the credit risk, the lower the amount of credit that will be available to individuals.

Here we provide a list of personal credit report services so you can check each aspect of your credit profile against the areas listed above.

Online Equifax  Reports

Want to order an online credit reporting service: Use the links below to place your order with Experian & Equifax:

Experian FREE CreditExpert Credit Report From Experian. See What an Experian Report Offers!

Equifax Your FREE Equifax Credit Report when you sign up to Credit Watch Gold Monitoring: Equifax Credit Watch Gold!

Financial History LEARN more about Credit Reports, the way lenders use them and how to Improve Your Credit Score: Personal Credit Report Articles !