Your money: A kick in the teeth for Christmas

Just when you need a credit card most, lenders may refuse your application for reasons that have nothing to do with your finances

The contents of your credit- reference report, the file that tells companies whether you pay your bills on time, could give you a nasty surprise when you apply for credit this Christmas.

The report may contain information that is either inadequate or irrelevant, giving potential lenders a misleading picture of your finances. Worse, it may even be cluttered with the credit problems of members of your family or your flatmates.

Lenders decide whether to grant credit by weighing up your request and considering a report generated by a credit-reference agency which grades applications. Your age, whether you own or rent your residence, postcode, type of job and car ownership are all assigned points by the lender. Having no telephone number is a big negative, but large debts like a mortgage are usually considered positives.

However, lenders' policies vary - as Cathy, a qualified accountant living in south London, found out. She had no problem obtaining a Visa credit card, but was turned down for a Marks & Spencer charge card.

The credit reference is a complicated affair. The two big credit- record agencies, Equifax and CCN, derive their information from electoral registers, reports and credit searches on you or anyone with whom you have a "financial relationship", and records of county court judgments - all using your home address as a starting point.

You have the right to see these files if you write to the agencies. But they are also leg-itimately available to any lender seeking to "check you out" bef-ore they extend credit. As a res-ult, anyone who does not appear on an electoral register can find it very hard to get credit.

More worrying is the agencies' habit of putting the financial details of your relatives, flatmates and partners in the report - some of whom may have had credit problems in the past. When I examined my own files, I found details of my parents' credit cards, mobile phone bills and store charge cards on the credit report, even though I have not lived at home for several years.

Agencies counter that they are complying with rules laid down by the Data Protection Registrar, which say that other people's details can appear on your report "if it is reasonable to believe" they have been "living as a member of the same family". But critics of the system say this can deny credit to whole families and households because of one person's irresponsibility.

And it needn't be someone you live with now. One credit agency listed an unsatisfied county court judgment against a particular dwelling - in effect barring the address.

A Labour government would look at changing the data- protection legislation to stop this clumping of data by "financial relationship", according to Nigel Griffiths, the party's consumer affairs spokesman.

"Everyone should be looked at as an individual when it comes to assessing credit, and we will consider changes in the law as one solution to this problem," he says.

If you want to see your credit report to find out whether there has been some muddling of your credit record with other members of your family, or other residents of your home, the details can be obtained from the two main credit-reference agencies - CCN and Equifax - within seven working days. Simply send them details of your residences for the past six years and a cheque for pounds 1 per application. You are also entitled to have the report amended if you feel something is wrong.

Contacts: CCN Consumer Help Service, PO Box 40, Nottingham NG7 2SS; Equifax, Dept 1E, PO Box 3001, Glasgow G81 2DT.