Monday Myth-Buster: Is there a credit blacklist?


Monday Myth-Buster: Is there a credit blacklist?

A credit blacklist is a scary image. You might be picturing a long, unravelling scroll that has thousands of names of people who have got into trouble with borrowing, and who all lenders refuse to deal with again.

However, the reality is that no such list exists. Regardless of how you’ve managed credit in the past, there’s no strict list with your name on that tells lenders not to lend to you again.

Everyone deserves a second chance

You may have struggled with credit in the past, but that’s not to say you can’t turn things around. After all, everyone deserves a second chance, and what may seem like an impossible situation to escape from can be remedied over time.

Regardless of any missed payments or red marks you have on your credit history, they’re automatically removed from your file after six years – providing the balances on the accounts have been settled. So if you missed a payment on your credit card seven years ago, for example, lenders won’t be able to see this when you apply for credit. The only exception to this is with certain debt solutions like bankruptcies and IVAs, which can stay there for longer if you don’t keep to the terms.

So what does a lender look at?

When viewing your credit history, a lender will look at how you have managed payments in the past, how much money you already owe to other lenders and whether you have been on a formal debt solution. They’ll also check details like your name and address to make sure you are who you say you are. There is no credit blacklist and lenders can’t put you or your address on one if you fall behind.

For the most part, lenders want to see how you’ve managed credit recently, as this is the best indication of how you’ll manage the money they lend you. 

When you apply for a mortgage or a secured loan, your lender will check more of your details than they would if you were taking out a credit card. This is because you usually borrow much more with this type of product and they want to make sure you won’t struggle with the repayments.

But what if my application is refused?

If you apply for credit but are turned away, this doesn’t mean you are on a credit blacklist. There could be many reasons as to why a lender would turn you down.

Each lender will have their own set of rules that you need to pass in order to borrow from them. Your address, credit history and income are all things that might come into play when they make their decision. Having a good credit history opens more doors for you, and you should find you are able to take out loans and credit cards with better rates.

If they refuse your application, the first thing you should do is check your credit history. You can do this for free using ClearScore or Noddle. For more tips on how you can start to turn your credit history around in three months, head here.