National Hunter: The secret credit agency

When we read this story in the Guardian we thought it was a hoax. All these years in the industry and we had never heard of it. Kind of an eye opener and how far off the beaten track personal information travels...
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It does not publicise its phone number or give an address beyond a PO box number belonging to a small office on a run-down street in Stoke-on-Trent.

Its name is unknown to the public. Yet it carries out around 100,000 credit checks every day, probing applications ranging from mortgages to car loans and store cards. Ask a bank or finance company why you've been rejected, and you will probably be told to contact one, or all, of the credit reference agencies - Callcredit, Equifax, and Experian - to see what they have on you. Send them £2 and you'll get a copy of your file by return.

Now Guardian Money can reveal there's a fourth agency, called "National Hunter", whose approval - or otherwise - can make or break an application. But, unlike the others, you won't find out the information it holds on you for £2, or be invited to apply online to check your data. Instead, National Hunter charges £10, the maximum allowed under the Data Protection Act.
Last year, 5m applications for credit were turned down across the industry, but how many were as a result of National Hunter is unknown. And, until now, the organisation's extremely low profile has meant that few individuals rejected for credit will have thought to check with National Hunter.

It was set up by a group of banks in 1993, but is now co-owned by 60 banks, building societies and specialist lenders. Its official headquarters are in Stoke-on-Trent though little of what it does takes place in the building. Although it's owned by the banks, National Hunter is managed and operated on a day-to-day basis by Experian, the giant of the credit agencies, based in Nottingham.

It does not assess creditworthiness in the same way as the other agencies - its sole purpose is fraud prevention. It is one of the most important weapons used by lenders in the continuing battle against financial crime.

National Hunter will warn a lender if its checks suggest that an application is "suspect". In turn, the lender's computer may then turn down an application, without informing the applicant precisely why, or which database was checked. The vast majority of its rejections are likely to be for entirely legitimate reasons.

But quite how many files National Hunter holds on individuals is unknown. And what if the "suspect indication" arises because of human or computer error - or because you presented the lender with facts that it cannot easily check?

"Suspect" or "inconsistent" facts, which may cause applications to be flagged as fraud risks, can include:

· Change of employer over a short period;
· Differences in spelling of a surname, initial, or date of birth;
· Change in driving licence number or a variation in other identification documentation;
· The same mobile phone number from more than one applicant;
· A substantial change in stated salary over a short period;
· Income which is difficult or impossible to verify;
· Applicants using details that are apparently from a deceased person.

Barclaycard is a major user of National Hunter. "Every night, we send it almost all our card applications. Next morning, its computers send them back, either with OK or showing a potential fraud," a spokesperson says. "If it's the latter, then we might decide to contact the applicant, although that may depend on other factors."

Mortgage lenders that we spoke to said they use the standard Experian and Equifax systems first, then decide whether to lend. Only then do they contact National Hunter to check it is not potentially dishonest.

But while the system weeds out many possibly fraudulent applications, legitimate applicants could fall foul of a check for innocent reasons - you might have had a big salary increase, or simply handed over an old mobile to a member of your family. According to a recent National Hunter presentation, to be "inconsistent" there has to be "a clear discrepancy between information provided by the consumer and information found, or not able to be found or verified elsewhere".

So the information you provide could be true, but it will be treated as potentially fraudulent if National Hunter cannot find enough information to check what you say. But if you question the rejection, banks will generally send a standard letter pointing you to one or more of the three credit agencies.

You won't be told about National Hunter - although you have a right under the Data Protection Act to demand a "subject access request" requiring a company to reveal what it holds on you.
The difficulty is, very few know about National Hunter's existence, let alone what it does. Managing director Tracy Wingrove told Guardian Money: "Any member of the public who wishes to obtain details of information we hold about themselves as individuals can request them under Section 7 of the Data Protection Act."

But she agrees that "sometimes it is not that easy to know about us".
She adds: "Our members are required to include certain key elements within the declaration/fair processing notices section of their application forms. The wording should indicate that applicants can find out which fraud prevention agencies are used and the method by which they can find this out.

"Our members must ensure that this information is made readily available to the applicant and preferably by means of a dedicated telephone contact number. If you ask your bank, it has to tell you about our existence."

Wingrove says banks should not turn someone down simply on the basis of one of its alerts. "Our rules say members can't make automated decisions. We would be concerned if banks did that."
The information commissioner, responsible for data protection issues, has expressed "strong views" on rejecting applications on fraud suspicion grounds alone, realising that no database is 100% foolproof.

Firms involved with fighting fraud recognise there is a clash between those who believe visibility harms fraud prevention and those who believe better knowledge of what can happen to a false application is a deterrent to potential fraudsters.

Wingrove accepts that National Hunter could be more visible. "We are providing a service to cut back on fraud and on identity theft. But we are happy to take Guardian Money's comments and concerns on board, and to address the issue of our low profile. We are moving to reveal more of our decision making over the next few months."

• National Hunter's website is nhunter.co.uk. Its address is N Hunter Limited, PO Box 2756, Stoke-on-Trent, ST6 9AQ. It has no telephone or email address for the public to use.