North tops south in credit ratings stakes

By Julian Knight
BBC News Online personal finance reporter

High credit scores are common in parts of the north

It is official - Southall, in the London Borough of Ealing, is the UK's least credit-worthy place.

Equifax, one of the UK's two major credit reference agencies, examined over a million credit files to rank the populations of UK towns and cities by their credit score.

It found that the hardy perennial north-south divide theory, where the south is always better off than the north, doesn't apply to credit scores.

In fact, people in the north and west of the UK often enjoy higher credit scores than many in south, due, in part, to the fact that they move address less often.

But groups helping people with poor credit ratings argue that the scoring system is too inflexible and doesn't take proper account of different cultural approaches to borrowing money.

See the most and least credit-worthy towns in the UK

The Equifax research doesn't mean that because an individual lives in a place where a high percentage of people have a poor credit rating that they all become tarred with the same brush.

Each person through their action, or inaction, influences their individual credit score and this is what counts towards whether a bank lends them money.

Excellent chance

Hundreds of places across the whole UK were ranked according to the percentage of people living in them with a personal credit score deemed to be excellent.

Generally, there is a high level of stability of residency in the north and people seem to be managing their credit well Neil Munroe, Equifax spokesman

To achieve an excellent rating an individual would have a credit score of 475 or higher out of 900.

Typically a person would have to be in full-time employment, a home owner and been on the electoral roll at the same address for more than three years to stand a chance of achieving an excellent rating.

In addition, the individual would usually have had to have borrowed money from a High Street lender in the past and repaid it in full and on time.

Someone with an excellent credit rating should have no trouble securing credit from a High Street lender.

Northern credentials

Surprisingly, the place with the highest proportion of people with an excellent credit score was not upmarket parts of the capital such as Knightsbridge or Mayfair.

Credit score points system Score above 475 Excellent 400-474 Good 350-399 Fair 300-349 Poor Below 299 Very Poor Source Equifax (marks awarded out of 900)

North Ferriby, in East Yorkshire, has the honour of being the place in the UK with the highest proportion of creditworthy people.

Nearly two-thirds of people living in the town, popular with families commuting to work in nearby Hull, had a credit score deemed excellent by Equifax.

Overall, 27 of the top 50 places ranked by their population's credit ratings were in the north and west of the UK.

"Generally, there is a high level of stability of residency in the north and people seem to be managing their credit well," Neil Munroe, Equifax spokesman told BBC News Online.

Mr Munroe added that house price increases and urban regeneration projects had created "centres of prosperity" in the north and west of the UK.

Racism

Of the 15 places in the UK with the smallest percentage of their populations deemed to have an excellent credit rating, nearly half are in Greater London.

"These places trend to have younger, more transient populations - which is a drag on the credit score," Mr Munroe said.

And Southall, near Heathrow airport, with just 7% of its population falling into the excellent bracket, is the UK's least creditworthy place.

In fact, more than half of Southall's inhabitants have a credit rating deemed to be poor or very poor, according to Equifax.

Western style credit scoring doesn't take account of ethnic diversity Willis Wilkie, Caribbean Parents Group Credit Union

Southall is a very ethnically diverse area - even by the standards of Greater London - and local groups told BBC News Online that many residents felt they were financially excluded by lenders.

The feeling they were getting a raw deal from High Street banks was one reason many Southall residents to turn to Pakistani-founded BCCI.

They found themselves victims of the world's biggest banking scandal when it collapsed in 1991 with debts of £16bn, pushing some depositors into bankruptcy.

In 1990, Willis Wilkie helped set up the Southall-based Caribbean Parents Group Credit Union after seeing friends turned down for credit by High Street lenders.

The group now has 200 members and helps obtain credit for people who may have been considered a poor risk by some High Street lenders.

"Time and again people I knew were turned down for loans to start their own business.

Locals say Southall's low credit rating doesn't tell whole story

"These were honest people who had been here many years or all their life. Banks didn't have to give a reason for refusal. I feel there was racism involved, a black name meant refusal," Mr Wilkie said.

Mr Wilkie added that he believed credit scoring systems failed some consumers from ethnic minorities.

"Western-style credit scoring doesn't take account of ethnic diversity."

"Many people in Southall are from the Muslim community and under the Islamic faith the charging of interest is not allowed... a lot of inter-community lending goes on."

"As a result many people here are not going to have a high credit score," Mr Wilkie concluded.

Top 10 places by credit rating
Place	County	% of Excellent Scores
North Ferriby	East Yorkshire	63%
Broadstone	Dorset	60%
Cottingham	East Yorkshire	59%
Kenilworth	Warwickshire	59%
Harpenden	Hertfordshire	57%
Ashtead	Surrey	57%
Upminster	Essex	56%
Ilkley	Yorkshire	55%
Lightwater	Surrey	57%
Cranleigh	Surrey	54%
Source: Equifax

Bottom 10 places by credit rating
Place	County	% of Excellent Scores
Smethwick	West Midlands	13%
Barking	Essex	13%
Birkenhead	Merseyside	13%
Brentford	Middlesex	13%
Bootle	Merseyside	13%
Northolt	Middlesex	12%
Newport	Gwent	11%
Mitcham	Surrey	11%
Thornton Heath	Surrey	9%
Southall	Middlesex	7%
Source: Equifax

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