Am I entitled to an explanation for credit refusal?

Q I was refused credit for a ?750 purchase at Dixons in July. The manager of the store gave me the details of the lender which finances its loans (Halifax Celetem), and of the credit reference agency (CRA) used by the lender (Experian).

I sent off for a copy of my credit details from Experian and there is no problem with my credit record. It shows that I have settled all my debts in full and on time. I have never had any mortgage arrears, CCJs or any kind of debt that I could not afford to repay.
The most I have ever been in debt was with an agreed ?600 overdraft at the end of the final year of my PhD in 1991.

I telephoned Halifax and wrote, twice, asking why I was refused credit but have received no response to date.

I realise that banks do not have to justify, in detail, their decisions to decline loans, and that I do not have any legal right to demand a loan. But because Halifax has not responded to my letters, I find it difficult to understand the reason for being refused credit. I'm also too embarrassed to apply for any of the other interest-free deals I've had details of in the post, in case I am turned down.

JLB

A You are right on several points. You don't have any automatic right to credit and banks don't have to provide detailed explanations of why they have refused to loan money to anyone.

However, lenders are bound by their codes of conduct to provide you with the principle reason why you were turned down. They also have to tell you whether a CRA was consulted about your application and whether the information it provided had any impact on their decision. As you have already checked your credit record and found no fault, this is unlikely to be the source of the refusal.

Halifax should have responded to your letters to confirm whether or not a credit scoring system was used and, if so, provide a simple description of how that system works. If a credit scoring system was used, you can appeal against the decision to turn you down (though there is no guarantee that the end result would be any different).

This is all covered by the Banking Code, to which Halifax subscribes. This places Halifax in breach of that Code, giving you the right to complain about it to the Banking Code Standards Board (BCSB) on 020 7661 9694.

You may get more joy by writing to Halifax's customer service division at Halifax plc, Halifax Customer Relations, Trinity Road, Halifax HX1 2RG, but if not, I would send copies of all correspondence to the BCSB to back up your complaint.

And don't be embarrassed to apply for credit elsewhere - companies use a variety of credit scoring systems so the fact that you were turned down by Halifax is no indication that you will be turned down by any other lender.