If you want credit, be prepared to hand over a little bit more personal info to the data inquisition in future. That looks like being the inevitable end-result of an announcement by UK banks that in order to help you manage your credit more responsibly, they are planning to expand the range of data that they will share with one another.
This is likely to mean identifying customers who only make the minimum payment each month, as well as those who use their credit card to withdraw cash. Also, whether you are on any promotional offers and what your credit limit is.
This is in addition to data already shared on how you manage your credit accounts and the amount of credit you have available.
Those most likely to be affected are 3.5 million cardholders who make only minimum payments. Research by checkmyfile.com suggests that no more than 3 per cent of card holders withdraw cash regularly, with a further 28 per cent admitting to having done so very occasionally.
The move has been broadly welcomed by the UK’s payment association APACS, who have long been champions of improved data sharing in the credit card industry. A spokesperson for APACS said: "Sharing behavioural data gives card companies a fuller picture of a cardholder’s borrowing habits which helps them identify, at an earlier stage, customers who may be at risk from becoming over indebted, and who are in need of support and advice.
"Extending the data shared by lenders allows them to make more informed decisions, which reinforces the banking industry's commitment to responsible lending."
So is there anything for the ordinary punter to worry about in these proposals? Provided the banks play by the rules, probably not.
The Office of the Information Commissioner pointed out that nothing in the above proposals was intrinsically unlawful – provided that banks made it quite clear to their customers what they were up to. If past experience is anything to go by, "quite clear" is likely to mean a slightly obscure clause buried at the bottom of the Terms and Conditions in 5-point type. But at least that would prove the banks were trying.
A criticism thrown at credit companies in the past has often been that they lend to individuals without looking at the full extent of their borrowing – and this would go some way to rectifying that. An individual applying for a single card with a credit limit of £10,000 is a very different proposition from someone applying for their fifth card with such a limit. This would allow banks to check exposure.
Slightly more worrying would be banks using this information not just for checking on individual ability to cope with debt, but as a means to tailor offers to their customers. For instance, they could use the information on promotional offers not just to determine when someone is about to come out of promotion, and thus have payment difficulties, but also to determine who are what the industry knows as “credit tarts” - people who shift their card provider every few months to take advantage of the best offer.
They could then decide not to make special offers to such individuals on grounds that have nothing to do with risk. The Register did attempt to elicit comment from the UK's leading credit agencies - Experian and Equifax - but sadly, both were engaged for much of the day.
This proposal is also ever-so-slightly "thin end of the wedge" shaped. Of course, as APACS says, more information leads to better credit decisions. But does more ever become enough?
The new data sharing measures should be in effect by the end of this year, although industry experts say that the core components of your credit file – namely how you have paid your credit accounts in the past and whether you are on the Electoral Roll – will remain key in any application you might make. ®