COMMENT
Find Out What Your Bank Thinks About You

HSBC, one of the UK's biggest banks, has announced that it will share its customers' full credit history with other regulated financial services firms.

Until now, HSBC has kept this data tightly under wraps, largely for reasons of commercial confidentiality. However, the bank has taken this step in order to monitor consumer debt more closely. It will be the first high-street bank to share both positive and negative credit data with other financial businesses, such as rival banks and credit-card issuers. Although banks are notoriously reluctant to share customer data, for fear of their best customers being poached, other banks are expected to follow HSBC's lead. This should lead to better monitoring of debt levels and reduced indebtedness among borrowers.

From 1 August, HSBC will provide data on its borrowers to the main credit reference agencies: Callcredit (a relative newcomer), Experian and Equifax. This plan will affect five million (almost half) of HSBC's personal customers, including myself. So, if you bank with HSBC and have a good history of managing your finances and debts, you may find it easier to obtain credit from rival banks in future. On the other hand, if your personal finances go off the rails every now and then, you may find future applications for credit being rejected more frequently than before. As with most things in life, some people win and others lose!

HSBC probably made this move in response to harsh condemnation by the Commons Treasury Select Committee. This leading group of MPs warned that personal debt levels were soaring, thanks to the ease with which borrowers could apply for numerous loans and credit cards. As long as borrowers stumped up their minimum monthly repayments, they could build up a total debt worth several times their annual wage. Eek!

Personally, I think that this is a step in the right direction for lenders, as it will prevent some borrowers from the financially unsophisticated to overspending high-flyers from amassing excessive debts. As thing stand at the moment, only a negative credit reference prevents an applicant from obtaining more credit, which can lead to irresponsible borrowing. Obviously, banks don't want to lend customers more than they can afford to repay, yet they've done this on millions of occasions. Recently, I discovered that a recently deceased relative had a personal loan with monthly repayments equating to twice her monthly income! Insane, isn't it?

It's about time that someone curbed our appetite for debt, as we've become a nation of credit junkies. (Take this quiz to see if this description suits you!) For example, our credit-card debt has rocketed from £10 billion in April 1993 to £56 billion at the end of May 2005. Over the same period, other unsecured (non-mortgage) debt, including overdrafts personal loans, has more than tripled from £42 billion to £133 billion. Crikey!

Learn more about your own credit history with a free report from Fool Partner CreditExpert.

More: Why pay interest? Get a 0% credit card today! | Visit our Get Out of Debt centre.