One in five on credit 'blacklist'

Almost 8m people of working age are classed as "non-standard"

New data estimates that up to one in five adults or 7.9m people of working age would be systematically refused credit, because they are deemed "non-standard" by mainstream lenders.

People can find themselves in this situation through no fault of their own, simply because their circumstances do not fit 'the norm', rather than because they have a history of default

Richard Cole, author of the report

People are commonly refused credit because they have defaulted on a loan or have County Court Judgements.

But many people are turned away because they are deemed not 'normal' by the credit industry.

In particular, those such as the self-employed or others who cannot provide sufficient proof of income, according to new figures from Datamonitor.

Worrying figures

The number of people who are considered "non-standard" by lenders has fallen 1.8% a year since 1997 - a drop of 600,000 people.

But more people are resorting to "sub-prime" lending facilities.

For example, there has been an increase of people using the home collection credit market - many of which charge higher rates of interest and are aimed at people on low incomes.

The market lent £3.3bn in 2001 - a growth of 6.4% since 1997.

This means that the average home now borrows £739 - nearly £200 more than in 1997.

Social exclusion

The government has said that it is committed to tackling 'social' exclusion.

Negotiations between its Social Exclusion Unit and the banks means that since November 2000, a driving licence or passport is no longer required for people to open an account.

Other forms of identification, such as benefit books, student identification cards and work passes can now be used as proof of identification.

However, many people are discriminated against, because of the way lenders rate credibility.

Richard Cole, Datamonitor financial services analyst and author of the report said:

"People can find them in this situation through no fault of their own simply because their circumstances do not fit 'the norm', rather than because they have a history of default.

"Being unable to provide sufficient proof of income, perhaps due to recent self-employment, represents one such example"