Notices of Correction

Clumsy_Girl

Found this article - I'm sure others with more experice than me may have a different view but food for though I think:-

"Consumers poorly advised to add a “notice of correction” to credit files

We continue to see many consumers who have been poorly advised to add a notice of correction to their credit files and which subsequently cause problems getting credit.

Introduced by the Consumer Credit Act 1974, notices of correction were intended to enable consumers to place a statement of 200 words on their credit file to correct errors. The law requires notices of correction to be read by a lender when assessing credit applications.

Unfortunately, over the passage of time, notices of correction have been abused by some consumers, and many are no more than an explanation for the circumstances leading to a late payment or default.

In practice, they are often dismissed by lenders as little more than excuses and, worse still, as an indicator of a potentially difficult customer. Lenders are not obliged by law to advise applicants why they have declined credit and may, if they wish, decline an application simply because a notice of correction appears on a credit file.

Because lenders are obliged to read the notices, applications from people with credit files containing notices of correction cannot be processed automatically and must be out-sorted for manual consideration. They cannot benefit from modern day swift, automated application processing. At best, this results in delays in making a decision and, at worst, results in a straight decline.

Manual assessment of credit has long been proven to be far less efficient than automated decisions based on credit scoring, so the chances of being declined are therefore much higher if a notice of correction is placed on a credit file. Worse still, where credit is offered at some high volume point of sale environments (e.g. in some mobile phone outlets or in some fashion outlets offering ‘in-flight’ discounts if a store card is applied for, there and then), counter staff are not trained or equipped to deal with manual referrals and this can result in a very public and very embarrassing decline.

Notices of correction remain on file until removed by the consumer. If they relate to a specific piece of data, there is a real risk that the data entry itself will be removed by virtue of age, as most information is expired from a credit file after six years. If this happens, the notice of correction simply raises a flag that a problem has occurred, that otherwise would not be visible.

There are only very few exceptional instances where a notice of correction may be the right thing to do, but in the vast majority of cases, they are bad news for consumers. If you have added one to your file, you should consider removing it"

kathfisch

Interesting food for thought! Where did the article come from? Such a pity that a facility to try to improve lending decisions could lead to being decline because of the computerised nature of everything.

Tootsie_Roll

kathfisch wrote:

Interesting food for thought! Where did the article come from? Such a pity that a facility to try to improve lending decisions could lead to being decline because of the computerised nature of everything.

Funny how you read it like that when my eyes were drawn to 'Unfortunately, over the passage of time, notices of correction have been abused by some consumers, and many are no more than an explanation for the circumstances leading to a late payment or default.' as the reason for the delays and declines.

moggins

I have to say that I have found it to be the opposite. I added two notices of correction to my record, prior to that I found it impossible to obtain credit. Now I am having no problems at all.

kathfisch

Tootsie_Roll wrote:

Funny how you read it like that when my eyes were drawn to 'Unfortunately, over the passage of time, notices of correction have been abused by some consumers, and many are no more than an explanation for the circumstances leading to a late payment or default.' as the reason for the delays and declines.

True, I saw that bit too. I guess the people who abuse the idea are contributing to the lenders dismissing anyone with a correction note. Even if it is an explanation (or excuse) its surely better for a lender to read it than reject out of hand. I don't think you can ever stop people from trying to put their point across with such a system, I was simply commenting that the automation of so much in life is a pity when it has results like that.