Guide urges credit refusers to say why without details

New guidelines on credit scoring will require providers to tell those they refuse whether it is because they have failed a scoring test or because there is a black mark in their credit history.

The guidelines, which take effect from 12 November, are explained in an updated version of the Office of Fair Trading's booklet No Credit?

Stores, credit card companies, banks and building societies are reluctant to divulge details of the way credit assessment works, for fear of fraud.

But the guidelines say that, without jeopardising the security of the system, consumers should be given as clear an explanation as possible for any refusal of credit.

For instance, they will be told that their score was not high enough, that adverse information was received from a credit reference agency, or that a particular policy, such as refusing the unemployed or those over-committed with debts, triggered the refusal.

Sir Bryan Carsberg, director-general of the Office of Fair Trading, says in a foreword to the guide: 'Of course, lenders have the right to decide whether or not to grant credit, and must be allowed to protect the integrity of their assessment systems against manipulation and fraud. These principles are, however, not incompatible with the greater openness which the guide promotes.'

In Money Grouse last week a reader complained that he was not told why he had been refused credit by House of Fraser. But the store did say that he had failed the credit scoring test, and this complies with the new guidelines.