Student loan defaults to be included in credit records

Thousands of former students could find it harder to get a mortgage or loan in future because of a deal between the Government and the credit industry.

Later this year, for the first time, the Government will supply the main credit reference agencies, Experian and Equifax, with the names of people who have defaulted on their student loans. The information will then be included in individuals' credit files, reducing their credit scores and making it harder for them to meet the lending requirements of banks or building societies.

Neil Munroe, external affairs manager at Equifax, said he expected "a few thousand people" to see their credit scores fall as a result of the reforms: "Student loan defaults do not seem to be a big problem but some will see their scores adversely affected."

Lenders are imposing tougher conditions on borrowers as they find the amount of money they have available to lend restricted by the ongoing credit crunch.

Mr Munroe warned: "Quite simply, money is going to become harder to get hold of. Consumers without a decent credit score could be in for a bumpy ride."

First in the firing line could be some of the estimated 1.8 million people whose low fixed-rate mortgage deals come to an end in the early part of this year.