Something which isn’t widely known is the way that banks keep internal credit scores. This isn’t the bit they report to the ICB which is well regulated and has various rules regarding how it is dealt with, this it the kind of thing they do for themselves which is not shared information.

Recently we had a client declined from a bank for something on their credit history, we searched and came up with nothing then found out via another route that there had been something with this bank 13 years ago when the person was still a student.

This person had taken out mortgages since then and had a perfect credit history, nothing went awry (the only issue was back when they were in college), but that old event came back to haunt them.

Big deal? Probably not, but then think about the potential fallout for people who opt for personal insolvency? What if the banks do the same to them? Where they are not locked out officially from financial services but they are in fact an un-creditworthy client in practice. What about a person who has debts with multiple lenders?

Will they then be shut out from every lender in the market bar the ones they didn’t deal with? And remember, they’ll be waiting about 6 years to be ‘cleansed’… Then they may find themselves in a market where they can’t shop around because of past problems that could haunt them for ever.

Even in crime 13 years is a long time, but in credit? It’s ancient history, in particular for larger borrowers, in particular for certain institutions who get helped then make mistakes and get helped again, but for the individual there could be greater repercussions than we even know about, this is the ‘unintended consequences’ we hear of so often.

As for keeping a person blacklisted for well over a decade? I think it’s fair to say, you’d be better off if you outright robbed a bank than to make a mistake and hope for any salvation (ever).