Are Asians denied the credit they deserve?

Southall was this week named as the area with the country's worst credit rating in a survey which raises serious questions about how credit reference agencies are treating Britain's Asian community.

According to figures released by Equifax, the west London suburb has the highest ratio of residents who clock up "very poor" or "poor" credit scores, adding up to more than half of the population. It also has the fewest number of people who are awarded "excellent".

As lenders base credit card and mobile phone contract decisions on credit scoring, the low scores mean the local community will be denied access to mainstream loans and products.

But what is also disturbing is that towns with large Asian populations feature heavily among those listed by credit reference agency Equifax as having very poor credit scores.

Southall is the centre of Britain's Sikh community, established when many came to the area from the Punjab in the 1960s, attracted by well-paid work at nearby Heathrow. Today less than 20% of Southall's population counts itself as "European descent" according to Office of National Statistics figures.

Judged purely on its ultra-low credit rating, Southall should be Britain's most poverty-stricken borough, with a population likely to fail to pay bills on time.

Yet its commercial centre, along Southall Broadway, is a thriving and bustling strip of shops selling everything from gold jewellery to mobile phones.

A typical three-bedroom semi costs a quarter of a million. And there is substantial activity in the travel agents advertising flights to India and Africa.

So why does a bustling centre where unemployment is virtually unheard of, and which has relatively low levels of economic disadvantage, come at the very bottom of the Equifax list?

Equifax, along with rival credit data providers Experian and Callcredit, owned by Skipton Building Society, assesses individuals for a variety of financial attributes including county court judgments, past credit history including the ability to handle credit cards without going into arrears, how long a person has lived at an address, and a number of other factors.

Equifax then uses this data with "decisioning" technology to come up with a score for each person. Anything from 475 upwards is "excellent" while below 299 is very poor. It refuses to disclose which factor counts for what weighting.

Equifax would not specify precisely why Southall is at the very bottom of the table. Neither could it say why many of the "credit also-rans" are either next to or near Southall. Areas such as Northolt, Brentford, Hounslow, Hayes, Wembley and Greenford are all within a few miles of Southall's centre.

What unites all these Middlesex suburbs is they all have a high percentage of Asians living within their boundaries.

So could there be cultural factors at play? The experience chimes with academic research into credit scoring methodology and the impact it can have on minority communities.

Federal Reserve Bank of Philadelphia suggests building a culture-free credit score might be difficult.

"The claimed objectivity in scoring may not benefit minorities who may have had limited access to credit in the past. Some argue that since these potential borrowers are not well represented in the loan data on which the scoring models have been built, so the models are less accurate predictors of their loan performance," it says.

"The accuracy of credit scoring for under-represented groups is still an open question," says researcher Loretta Mester.

But Equifax says its ratings are fair. "The Ratings are based solely on data on individual credit files. The London towns at the bottom could be an indication of the highly transient nature of many people who live there -and this is not specific to any racial group."

Jobs & Money took a trip to Southall to find out if there were pointers that did not enter Equifax's "decisioning".

Rather than being a poor credit risk, the local community may be more likely to spurn debt and favour thrift. And if individuals do not take out credit cards and loan agreements, they do not build up a "payment record" through which they can be judged.

Shop owners we spoke to said cash is still king among Asian consumers. School uniform shop owner Hanwant Chadha, 59, said only a tiny minority of his customers use cards. But of those who do, "only two or three have been turned down in six months," he says.

Saree shop owner Myn Singh said his business is 95% cash.

Bob Kundi, 23, told us he believes there are cultural factors which are ignored in credit scores.

"Asians are savers, only spending when they have the cash. If I get one, I'll only use it for online purchases," he says. He had taken out a credit card when at university, but had cancelled it soon afterwards. Aysha Malik, 22, was out celebrating her 2.1 degree in English Literature.

"I don't have credit and don't want it. I've been brought up not to borrow - my student loan debts are plenty to worry about for now," she says.

"So I probably won't apply for one when I start my working life," she adds.

Others say they have learnt the lessons of easy credit. Estate agent Sunny Patel, 26, gave a clue to Southall's rating. "I prefer cash because if you haven't got the money, you can't spend it. I used to have five cards including a Barclaycard but I got rid of the lot.

"Many of my friends got into trouble when they reached 18 and banks were only too happy to throw credit at them. I think everyone has learnt a lesson from that."

But Mr Patel said he did not know anyone who had been refused a card, although he did know many - himself included - who would never apply.

The Equifax analysis of credit scores also reveals a new north-south divide. But this time it's the north that's on top.

It found that of the top 50 towns which had the highest number of "excellent" rated individuals, 27 were in the north or Scotland. These included the top scorer, North Ferriby, a small town just half a mile north of the Humber Bridge. Ilkley in West Yorkshire and Kenilworth in Warwickshire also scored highly.

But what Equifax also disclosed is how much credit rejection has become a fact of life in modern Britain.

In a separate survey of 5,000 people it found that 80% had at one time or another been rejected for credit.

Do you know the score?


No one has a right to credit. So lenders check you out before they lend or offer a card.

But you do have a right to see material held on you by credit reference agencies such as Experian, Equifax and Callcredit. They keep information on almost every UK adult, whether they borrow or not.

This includes public record information such as the electoral roll, and records of any county court judgments. They also have material supplied by banks and mobile phone firms. Generally, if there are negatives on your file such as a failure to pay on time, or you have lived somewhere for under three years, or you have no credit record, you will find it hard to get credit or have to pay higher interest.

Some lenders may consider an excessive number of applications as a minus point.

But this should not affect you if you are merely shopping around to find the best deal - most lenders now differentiate between an application for credit and an inquiry. You cannot change the details no matter how embarrassing, if they are accurate. However if an entry is incorrect, you are entitled to send a "notice of correction".

Under data protection laws, you have the right to see this file for a £2 standard fee. Going online is quicker.

Equifax gives instant online access on myequifax. Costing £8.25, it gives details of credit cards, loans, and the names of firms accessing the files in a printable format.

Customers can also dispute errors online. Experian offers a 30-day trial of CreditExpert, a credit monitoring service. This gives weekly monitoring of a credit report to alert you to potential fraudulent activity; unlimited access to the Experian credit report, and online access to an easy-to-read snapshot of your credit report.