A black mark can really damage your credit rating

This is a small but significant victory for consumers. It should ensure that none of us is forced to endure the nightmare faced by Richard Durkin.

The fact is that getting a black mark on your credit file can be incredibly damaging. Not only could it mean being turned down for a mortgage or loan, it will almost certainly mean being penalised with a higher interest charge. That’s because the black mark will suggest to lenders that you’re a greater risk, so they’ll expect greater rewards.

The ruling means that companies that freely pass on negative information about you will be forced to think more carefully about doing so in the future.

However, today’s court ruling will only apply to those banks and finance houses which offer credit to people buying goods under what are known as “debtor, creditor, supplier” agreements.

In short, it will only apply to store finance, the kind of deals offered at the till in shops or at motor showrooms.

Who offers store finance? They tend to be specialist firms, such as the credit giant Brighthouse, or companies such as Hitachi Capital or Ikano Bank. HFC, the bank in Mr Durkin’s case, was subsequently bought by HSBC and effectively closed.

The Supreme Court ruling actually refers to “restricted use credit”. In short, that means loans that are handed out to pay for specific items, such as a laptop or fridge. The ruling will have no bearing on standard personal loans, mortgages, or revolving credit such as overdrafts or credit cards.

But it will still have a bearing on the hundreds of thousands of people who every year take out such loans. If you’re one of those and you miss a payment, the lender concerned now has to contact you to find out what the problem is before informing the credit reference agencies.

If they pass on wrong, detrimental information they could be sued.