Last
updated: 03/03/08
Student
loans to feature in credit checks
Credit
reference agencies are to receive details about the repayment of student
loans for the first time.
These repayments have previously been kept private between the Student
Loans Company and individual graduates. From later this year details
of payments will be sent to the three credit reference agencies in the
UK: Experian, Equifax and Callcredit.
People applying for personal loans, credit cards and mortgages are accessed
by companies analysing their credit history, and individual credit ratings
could be negatively affecting graduates chances of obtaining further
financial services.
It is becoming increasingly important to have a good credit history.
This is acknowledged by Neil Munroe, eternal affairs manager at Equifax:
“This is the year that borrowers are going to wake up to the importance
of their credit file. Quite simply, money is going to become harder
to get hold of. Consumers without a decent credit score could be in
for a bumpy ride.”
Francis Ghiloni, marketing and business development director at mform.co.uk,
an online mortgage advice service, emphasised how much of a challenge
obtaining a good credit score could prove for graduates, “The
average student can face debts of over £20,000 and their average
starting salary is around £16,000. Given statistics like this,
many students miss one or more of their student loan repayments.”
But Experian spokesman James Jones believes this will help credit reference
agencies cope with the large amount of debt graduates leave university
with, “This is important information for lenders to have in order
that they can lend responsibly.”
Another worrying aspect of the release of this data is that, at present,
only ‘black data’ such as late and missed payments will
be recorded on credit files. ‘White data’ which shows successful
payments will not be recorded, meaning that information released to
credit agencies will have no positive impact to credit ratings.
Neil Munroe hopes that this positive data will also be made accessible,
“Hopefully, at some point in the future, we will see this information
released. It could help a lot of people with slight credit histories
to obtain a higher score.”
He added that reassuringly ‘student loan defaults do not seem
to be a big problem’ and that only ‘a few thousand people’
will see their credit rating drop as a result.
