Article by Barry Stamp - 30th December 2011

Blacklists - Ten things you probably didn’t know

'Credit blacklists don’t exist' – how often have you read that? Well here we list ten irrefutable facts about blacklists – so you can judge for yourself.

  • Blacklists are not against the law. No lender is compelled by law to give credit or to give any reason for declining credit. Lenders consult many different information sources before making a decision, including any form of list it can lay its hands on. Any list containing personal data is automatically regulated by the Data Protection Act 1998.
  • Blacklists – as a term - may be held to have racial connotations. Following the Race Relations Act 1976, many lenders and traders renamed their blacklists to ‘refer lists’ or ‘orange lists’ – the ‘orange’ signifies caution. These are lists of the people who the trader or lender choose never to deal with again, and that’s perfectly lawful too.
  • Blacklists may be drawn up from what are suspected to be surreptitious meetings held informally. Credit managers regularly meet in ‘credit circles’ to exchange information informally about slow payers and fraudulent attempts to obtain monies by deception. Credit circles are not regulated by law but the Office of Fair Trading has set out informal guidelines as to how meetings should be managed. In general, anything that helps prevent fraud can be kept relatively secret, whereas information on payment history (other than defaults and judgments) needs the consent of the individual consumer before it can be shared with others.
  • After sustained failure to obtain successful prosecution of mortgage fraudsters via the Police and the Serious Crimes Office, mortgage lenders formed the Association of Mortgage Lenders in the early 1980s to share information on fraudulent mortgage applications. This has now morphed into the Committee of Mortgage Lenders (CML), a not-for-profit organisation and the trade association for the mortgage lending industry, whose members account for around 94% of UK residential mortgage lending. Right up until 2010, CML members shared information regarding repossessions on the CML Repossession Register, which was routinely reported on credit files. That register has now been destroyed.
  • Credit card providers were the first to operate and share a ‘hot card list’ of cards reported stolen or known to be in fraudulent use. The list originally had a limit of only 200 cards, but was quickly expanded to have unlimited depth. Today the list not only contains stolen cards, but also those that are over limit, amongst other things.
  • Our government publishes a Sanctions List through its Asset Freezing Unit of persons who cannot open bank accounts, cannot borrow and cannot generally be commercially traded with and whose assets must be seized if identified by a bank or other company. There are currently over 8,500 names on the list. The UN, and Europe, also publish similar Sanctions Lists.
  • A list of suspected frauds in the UK are listed at Cifas – the UK’s Fraud Prevention Service. A Cifas warning will not lead automatically to a decline of credit, but members of Cifas are required to liaise with each other and interrogate any application coming from that address much more thoroughly to rule out the possibility of fraud. Consumers are entitled to see only two types of Cifas warning - one of which is Protective Registration, which is a warning applied applied directly by the consumer. The vast majority of Cifas fraud warnings are available only to Cifas lenders to view on the credit reports they pull from the credit reference agencies. The reports you pull from the same agencies do not list all Cifas warnings.
  • Insurance companies share claims data on the CUE database – the Claims Underwriting Exchange – to protect themselves from claim abuse.
  • A statutory credit file request, made by consumers under sections 7 and 9 of the Data Protection Act 1998, does not compel a credit reference agency to provide details of fraud database entries that may exist against a consumer, other than a limited number of CIFAS warnings as mentioned above.
  • Credit Reference Agencies do not maintain nor publish a general credit blacklist of persons who may not be provided credit. Their databases are based on factual events reported from many sources. It is the interpretation of those facts that leads to credit being declined, whether this is assessed manually, or through a credit scorecard.

So there you have it. No such thing as a credit blacklist? Well, that depends on your definition of a blacklist.

You can check that your credit file is clear of any unexpected warnings by checking your credit report based on information from all four Credit Reference Agencies on checkmyfile.

checkmyfile is free to try for 30 days and then costs £14.99 per month until you cancel, which you can do online at any time. It's by far the most detailed report available in the UK.

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