Equifax has warned that not all transactions being carried out are being logged on credit files, which could lead other lenders to make the wrong decision.
Any transactions carried out on a loan in the UK should be registered with the appropriate credit agencies. This allows other lenders to see how much you already owe and whether you have kept up to date with payments.
However, Equifax has said that in many cases, this is not happening, meaning credit scores for individuals will be wrong and could affect future applications for loans.
But it isn’t just other lenders who could suffer because of the lack of information recorded on a credit file; the person borrowing the money could also lose out.
Payday lenders are notorious for targeting individuals who are unable to access credit from a mainstream lender, hence the extortionate rates of interest charged. There could be many reasons why a high street bank refuses an application for finance, but one of the most common is a poor credit history.
Taking out any kind of new borrowing – including payday loans – and paying them back in full and on time, will boost a credit rating and could mean that next time a loan is needed, a mainstream lender could give the thumbs up to an application. Payday lenders failing to record that an individual is paying in a timely manner, means they do not get the ‘points’ on their credit file that they deserve.
The Business, Innovations and Skills Select Committee recently decreed that all transactions connected with a payday loan must be centrally recorded, but Equifax has said that many are failing to comply.
If you’re struggling to repay your debts, speak to a member of our team about Debt Management Plans.