Around 640,000 people are being flagged on a little-known fraud database, making it hard to secure a mortgage or loan, according to a report in The Telegraph.

The newspaper revealed that a fraud prevention register owned by banks and building societies is blocking borrowers from obtaining credit – even though most people don’t even know that their details are on it.

The National Hunter database was set up by lenders in 1993 and is solely concerned with preventing fraud. Lenders that have concerns about customer applications can register them on the database, which can be viewed by 50 member organisations.

Worryingly, companies are not required to notify their customers when they make an entry. At present around 640,000 entries are held on the database, which stay there for up to six years. Unlike credit reference agencies, it does not hold any credit scoring records, credit histories, copies of County Court Judgements or electoral roll information.

Borrowers who are flagged on the register can find it almost impossible to secure credit as a result. National Hunter does allow customers to check their file for a £10 fee, but it doesn’t offer a dispute facility and simply refers unhappy customers back to their lender. It is the lender’s decision whether to reconsider its entry or not.