Why you shouldn't lie on a credit application
By Marianne Curphey
As banks have tightened their lending criteria, it has become more difficult to get credit. As a result, some people have been tempted to bend the truth or even lie in the hope that lenders will favour their application for credit. But lying is pointless and could damage any future applications for cards or loans, not to mention make you liable for fraud charges.
According to a poll by www.vouchercodespro.co.uk, a quarter of people who apply for a loan or credit card are prepared to lie on their application form. The most common fib is salary inflation (31%), but those questioned also admitted to concealing existing debts (27%), pretending to have a job 16%), being married (11%) and lying about their age (9%).
"Not telling the truth on your application form is pointless and misguided," says Yvonne Goodwin, independent financial adviser and head of Yvonne Goodwin Wealth Management.
"It will always come back to haunt you. People are sometimes unaware of how much information lenders share and there really is no point in trying to hide something. It is actually better to be honest and upfront when you are making your application."
What's more, banks, building societies, credit card and loan companies have increasingly sophisticated databases, and can connect data about you from a number of different sources to build up a profile of your financial life.
If you get caught, even if you don't end up prosecuted for fraud, you might still find it impossible to secure any kind of credit in the future.
Here's why you should avoid these common credit application lies:
It can be tempting to inflate your salary to flatter your bottom line. However, Goodwin says, "if you aren't earning as much as you pretend you are, then it is likely that you won't be able to afford the repayments and you will end up lurching from one financial crisis to another."
If you have ever ordered a copy of your personal credit report, you will find your outstanding debts are clearly listed on it"Your credit reference, which lenders can access if you make an application for credit, will show all the other [credit] cards and loans you already have, and your payment history," says Goodwin. "So it is pointless lying about it."James Jones, head of consumer affairs at Experian, concurs."Lenders can view your credit history when they are assessing your suitability," he says. "They can see all the cards and loans you have had for the past six years, your bank account details, any outstanding overdrafts, and whether you have missed payments."
A common mistake is to tell yourself that you are between jobs and will soon get another one, so you don't need to reveal that you are unemployed. However, this approach can easily backfire."If you have no income coming in, how are you going to repay?" says Goodwin. "Don't fool yourself that you will sort it all out when you find another job. If you are in a desperate situation where you need credit because you are not earning, then it is time to take a hard look at your income and expenditure and rebalance your budget."
People may be tempted to lie about this in an attempt to get a better deal or a more favourable rate, but lenders may see this as fraudulent.Although it won't show up on your credit report, it is still unwise to lie, as your lender, particularly a mortgage lender, could ask to see your marriage certificate as evidence.
You need to be 18 or older to apply for a loan or credit card, and some companies will not lend to you if you are older than 65 or 70. However, your date of birth is on your credit report for all lenders to access.Your credit report does not contain information about your actual salary, employment status, marital status, rent, mortgage or council tax payments, says Jones. "Increasingly," he says, "there is information from mobile phone companies, landline, broadband and television providers, gas and electricity companies and water companies."
Lenders are now using data sharing and fraud prevention websites like Cifas, which provides a database of confirmed fraud data, as well as an extensive range of fraud prevention services.
Jones says such organisations can spot anomalies in applications and share information about known or suspected fraudsters. They also are developing systems to spot mass-market fraud and identify theft by gangs using fraud-sharing networks like the National HUNTER system (an anti-fraud data sharing system for use by members of the financial services industry).
"For example, a gang might submit multiple applications from different addresses around the country but provide the same home phone number for each one, which a fraud detection system would flag up," Jones says.
Updated: 3 July 2014
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