Several of the major players in the arena of Payday Lenders have signed up to receive more comprehensive information about those applying for loans. One of the country’s largest credit reference company known as Callcredit will be able to supply the Lenders with up-to-date daily information on the credit history of clients that are applying for loans. This in comparison to the current system that is only updated once a month.
Lenders will be able to see if a client has taken out loans with other lenders, if there have been any roll over’s, extensions, missed payments or major debt. Borrowers will still be able to borrow money from multiple lenders if they qualify, but it follows that should they have debt with other payday firms they would find it more difficult to successfully apply elsewhere.
This action comes after pressure from MP’s to create an up to date system of communication between the payday lenders. The concern being that it is too easy for borrowers to find themselves in a hole after signing up with several different lenders. The payday industry welcomes the new regulation as many of the firms would like to see their bad reputation reversed and rather be considered as a responsible member of Britain’s financial service industry.
A spokesman from one payday firm says, “ Given the importance of and accurate and up-to-date picture of an individual’s borrowing history and financial position in deciding whether to extend credit, we hope that the platform will be adopted beyond the short-term credit sector and across all UK consumer financial services.”
Callcredit confirms that this will be the case. Payday lenders will not be the only financial service provider to benefit from this new service. Mainstream providers have also expressed interest in the system. The new system will be launched in April this year and should be fully functional by mid May. Callcredit assures users that there will be no extra charge to upload daily information into the database than there is for the current monthly system.
The existing system was designed for more conventional lending such as mortgages, but as the scope of lending has changed so drastically in Britain, the new system will give a clearer overview and insight into the consumer’s credit history. As much as payday can offer instant loans, so Callcredit can offer instant information on the client.
Peter Mansfield, managing director of Callcredit says, “There is a growing consensus that the availability of more frequent data sharing is required to ensure responsible lending in certain sectors. As well as addressing specific and immediate concerns in the alternative lending sector we believe that it is crucial to build a solution that benefits a broad spectrum of lenders.”
Not only does it seem that this new database will be beneficial to the payday sector for both practice and prestige, but it seems that the whole financial sector would do well to consult Callcredit when extending a loan. This might also draw attention to the real problems that Britain faces, namely desperation and poverty.