What you need to know about blacklists

A blacklist is an organized list that records the details of individuals who have engaged in misconduct. And there are so many blacklists all over the world (may or may not include Raymond Reddington’s blacklist).

However, the most popular is the United States of America (USA) No Fly List, a database (also known as the terrorist watchlist) maintained by the FBI’s Terrorist Screening Center. It contains the identity information of known or suspected terrorists or fraudulent individuals. 

In Nigeria and across Africa, we have both public and private blacklists. For instance, the Nigeria Interbank Settlement System (NIBSS) maintains a blacklist of Bank Verification Number (BVN) holders, commonly referred to as a watchlist, which includes individuals known to have been involved in financial fraud.

In essence, blacklists are places you want to avoid if you’re playing by the rules, but at the same time, they are necessary, and you need them to exist because they protect people.

Today, the internet has blacklists specifically for spam, such as Spamhaus, one of the largest in the world. These blacklists protect individuals by preventing their email inboxes from being flooded with thousands of spam emails. Without them, managing your inbox would be nearly impossible. Over 300 billion worth of emails are sent daily, and half of them are spam emails, i.e. a whopping 150 billion emails, imagine not being able to protect yourself against those.

Credit bureau vs Blacklist

Although they are sometimes confused, credit bureaus and blacklists serve different purposes.

A credit bureau is a licensed credit reporting agency that collects and maintains credit information to help lenders assess an individual’s creditworthiness.

A blacklist, on the other hand, contains records of individuals or entities considered high risk because of fraud, loan defaults, or other financial misconduct. Unlike credit bureaus, blacklists do not provide a complete history of a person’s financial behavior.

Key functions of credit bureaus

• Compile credit histories and generate credit reports.
• Calculate credit scores based on repayment history.
• Continuously update credit information received from lenders and other creditors.

Key characteristics of blacklists

• Include only individuals or entities with negative records, such as fraud or repeated loan defaults.
• Are often maintained privately by organizations.
• Help lenders identify high-risk applicants and reduce fraud.

Largest private blacklist in the credit ecosystem: A lender’s dream

Lendsqr operates one of the largest private blacklists in Nigeria’s financial services sector. The database combines internal records with contributions from more than 3,500 lenders using the Lendsqr platform.

If a borrower uses a stolen identity, attempts to launder money through a lender, or uses stolen payment credentials during a loan transaction, they may be added to the blacklist. The information can then alert thousands of participating lenders, helping prevent future fraud across the network.

Lendsqr’s blacklist is called Karma.

Karma is available as part of Lendsqr’s loan management software through its decisioning tools. It is also available as an API, allowing other organizations to access the service. Learn more about the Lendsqr APIs.

By integrating Karma, lenders can identify applicants who have previously defaulted on loans or been linked to fraudulent activity. Lenders can then decide how much weight to give that information during their credit assessment.

Karma’s calling: Lendsqr’s blacklist is saving lenders billions

We’ve done the math, and we’re thrilled to announce that Lendsqr’s blacklist, Karma, has cumulatively saved and still saving lenders billions. It’s an achievement we’re incredibly proud of.

If you ever need access to the Lendsqr blacklist, we’ve made it very affordable. Our priority is expanding community protection within the credit ecosystem, not profiting from it.

Sign up for Adjutor to get readily available access to all our API services, including Karma.