Real time credit checks – is this a turning point for short-term lenders?

From April this year, high-interest loan companies using the credit reference agency Callcredit will be able to share data about potential customers in real time.

Most people, of course, assume that this is already happening.  We see evidence of information about ourselves flying here, there and everywhere in cyberspace, so why wouldn’t financial institutions know everything about our finances at the tap of a key?

No kind of lender would want to advance us money unless they thought we could pay it back, would they?  And they could only work that out if they could see what other loans we already had, surely?

Er, no.  Up till now short-term, high-interest lenders offering decisions on loans within minutes have not been able to see that someone already had six payday loans with other companies, four of them rolling over. 

Now it would appear that one credit reference agency at least is putting in place a system that will enable what is referred to as the “alternative finance market” to carry out credit checks with up to date information.

This is a necessary step on the way to effective credit checks, but the key is in that word “enable”.  They may sign up, they may see the information.  But will it result in lenders saying to potential borrowers: “No, actually, it really wouldn’t help if we lent you more money.  You need advice, not more debts.  Here’s a list of free debt advice services which will be able to help you”?

The proof, as they say, will be in the eating.


For more on this story, click here