Credit score myth: Is there a credit blacklist?

Confused man looking for answers

We’ve all heard about it – the so-called credit blacklist. If you find yourself on this – so the rumours go – every lender going will ban you from borrowing.

And once you’re on this list you apparently can’t get off it – meaning you won’t be able to borrow again.

But does the credit blacklist actually exist?

Actually, there’s no such thing – it’s just a credit score myth!

We’ll take you through how lenders assess you when you apply to borrow and how you can make sure that there’s nothing holding you back.

The blacklist – it’s not real!

There’s no central list to tell a lender whether or not they should let you borrow from them. Just because you’re turned down by one lender, it doesn’t mean they’ve all blacklisted you.

The reason you might think you’re on a credit blacklist is if you’ve made a lot of applications for credit and been turned down by each and every one. Surely there’s some reason for this?

Well, yes there is – but it’s not because you’re on one centralised blacklist. When you apply to borrow, lenders will run a credit check on you. This means looking at your credit report. They’ll look at all of their criteria and see if you match up to this based on what your credit report shows.

If you do match up, they’ll accept you for borrowing. And if you don’t, they could reject you or accept you at a higher rate and/or for a lower credit limit.

How to improve your credit score

To start improving your credit score, take a look at your credit report with the three credit reference agencies – that’s Experian, Equifax and CallCredit, in case you’re unsure. All three of these now offer a free way to get your report – Experian’s CreditMatcher, Equifax’s through ClearScore and CallCredit’s Noddle.

When you look at your credit reports, check if there are any obvious mistakes – like if it shows you as living at two separate addresses, for example. This could be what’s causing a lot of lenders to turn you down.

If there is anything wrong, you can write or send an email to the relevant credit reference agency. They’ll look into your query, speak to any lender necessary and get back to you within 28 days. Then, if they agree that there was a mistake, they’ll update your report – this could take up to eight weeks.

But remember, you can only do this if there’s a genuine mistake – like a default you didn’t actually get. If you did get the default, you won’t be able to get the credit reference agency to remove it.

After credit problems

If you’ve got missed payments, defaults or insolvencies on your credit report, it’s likely that these will be contributing to lenders rejecting you for credit. Don’t be disheartened if you see them though – they only last on your report for six years. So if it’s five years since your last default, it’s nearly time for them to drop off. If you’ve only just had a default, you’ll still have a while to wait.

When your credit report has cleared of any defaults or missed payments, you might decide that you want to look at applying for credit again. It’s a good idea to use a ‘soft search’ tool when you do this. This lets you see if you’re likely to get credit before you apply. The reason why this could be worth considering is because if you apply for a lot of different types of credit in a short space of time, this could damage your credit history. That’s because it can make you look ‘desperate’ for credit, which can put some lenders off.

When you’ve had problems with debt in the past, it’s really important that you’re as sure as you can be that you’ll be able to afford repayments before you take out any more credit. If you borrow more than you can afford, this could mean you’ll start to struggle with debt .