Most people are aware of how fraud can have a catastrophic effect on ones credit rating. Obviously, ID fraud is a major concern for many consumers, and being the victim of such fraud could result in ones credit card being declined or in being denied for loan applications. However, what many people are unaware of is that they may be turned down for loans not because they are victims of fraud or, indeed, are fraudsters themselves, but because of flaws in how lenders determine if an applicant is a fraud risk. Lenders use two major services, National Hunter and CIFAS, in order to determine an applications likelihood for being fraudulent. Unfortunately, these services are far from foolproof, and if applicants are repeatedly denied loans because of mistakes on these fraud lists, then their credit scores could suffer. This article will look at what National Hunter and CIFAS are, how they determine a fraud risk, and what consumers can do if they believe these lists are giving incorrect information about them.
National Hunter was set up by the banks in order to give lenders a better idea of how much risk an applicant poses for fraud. This once secretive organization has become the topic of media scrutiny lately, but many UK consumers are still unaware of its existence. This lack of knowledge is despite the fact that National Hunter receives about 100,000 applications every day, making it very likely that many UK consumers have been subject to a National Hunter fraud check without knowing about it. National Hunter works by looking for factual inconsistencies between ones current application and applications made in the past. Inconsistencies that National Hunter looks out for are different addresses, differences in how names are spelt, a mobile phone number shared by more than one person, a sudden increase in income, change of employment in a short period of time, changes in identification numbers (such as a drivers licence), and stated income that is difficult to verify. The problem with these inconsistencies is that while they may indicate fraud, they could also be entirely innocent. For example, a mobile phone number may be shared if one has given up an old mobile to a friend or relative. Likewise, sudden increases in salary are not unfathomable, and for those who are self-employed, verifying income can be particularly difficult.
For those who want to avoid their loan application being rejected because of National Hunter, their best choice is to be as consistent as possible on all application forms. Furthermore, consumers can make a data protection request to National Hunter to find out what information is being held, although such a request will cost Â£10. Unfortunately, it is not possible to correct errors with National Hunter itself. Rather, consumers will have to visit the lender that initially denied their application in order to have the information corrected.
CIFAS is generally more reliable than National Hunter, as it only contains a database of those who have committed known fraud. Therefore, those who are on CIFAS lists should be well aware of it beforehand. Mistakes, however, can arise, the most common one being linked to addresses. If fraud has occurred in the past at an applicants current address, then their application may be flagged for potential fraud. This identity confusion can have a detrimental impact on ones ability to get approved for loans. In such a case, the consumer should first contact the lender that denied the application. If the lender fails to take action, the consumer can then contact CIFAS in order to get the matter straightened out.
It is important to realize that while National Hunter and CIFAS are important tools for lenders when determining an applicants suitability for a loan, these services cannot be used as the sole reason for denying an application. Furthermore, new guidelines mean that lenders must make clear to applicants whether National Hunter or CIFAS were factors in that applicants denial for a loan. Being mistaken for a fraudster can have a grave impact on ones credit rating, and if one thinks one is the victim of incorrect or misleading information, the most important thing to do is cease all loan applications and verify the information is correct with these two agencies. By doing so, consumers will help better protect themselves from suffering an unfairly low credit score.
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