Missing Information May Harm Personal Loan Applications

Mon, 08 Feb 2010

Borrowers who have not taken out a loan since the start of 2000 may be being penalised, according to consumer groups. The details of millions of loans, mortgages, bank accounts and credit cards taken out before the turn of the millennium are said to be missing from the systems of building societies, banks and lenders, as the terms and conditions of the credit agreements mark out the loans as secret under the Data Protection Act .

It is estimated that 40-50 million financial accounts of all types do not appear on credit files, with borrowers penalised as a result. The automated underwriting system employed by lenders when dealing with applications for personal loans and other forms of credit often rejects any lenders who have missing details. Those accepted in spite of missing details may be being charged a higher interest rate as a result of the technicality.

Some lenders have signed up to share information about borrowers, though there is no legal requirement to do this meaning some lenders are missing information. Mistakes are also common, with Which? recently finding that one in six files held by credit reference agencies was incorrect.
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