MSE News: Incorrect credit data 'could cost you'

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The Information Commissioner's Office (ICO) says incorrect information on borrowers' credit files could stop them getting future credit ..."

Read the full story:
Incorrect credit data 'could cost you'

oakhouse13

I was hoping someone from MSE would suggest to the ICO that if access to your credit file could be made online there would be no need to charge as the credit agencies would not have the expenditure of sending out a physical copy. The ICO was keen on keeping the £2.00 fee but only because they were thinking there was an admin fee in making it physically available through the post.

david.l_4

I think it should be illeagle for a 3rd party company to hold all your info if i gathered loads of info on other people i would get nicked.

Joeler

oakhouse13 wrote: »

I was hoping someone from MSE would suggest to the ICO that if access to your credit file could be made online there would be no need to charge as the credit agencies would not have the expenditure of sending out a physical copy. The ICO was keen on keeping the £2.00 fee but only because they were thinking there was an admin fee in making it physically available through the post.

They are all available online, however they can charge what they like for this service, and they do, by monthly subscription.

Currently they have the monopoly because we all need to know the data they have on us is correct, and they are the only people who hold it!

jblackmore

The credit reference agencies have a brilliant money making scam going, and it seems the ICO are oblivious !

You have to pay around £10 for easy online access to your file, to report errors, and then have to pay the other credit agencies likewise.

Surely the DPA requires all data stored to be accurate, so credit agencies should be required to allow people to check this online FREE OF CHARGE and any corrections should be made without delay and communicated to the other credit agencies, so people only have to check one file and don't pay for the privilege.

There is clearly a profit in holding incorrect data at the moment, so its not surprising the credit agencies are quite happy to keep doing what they have been !

pepe2008

Maybe there could be some way that the ICO could provide some sort of 'portal' whereby we could determine our Identity with them and then access ALL the CRAs via them to check, once a month say, on our files.

They could make this pay with 'click-throughs' ( NOT from Loan Cos tho'!).

If we find something that definitely should NOT be there, then the Organisation or Individual that put that incorrect info on the file should pay for its removal.

There I go again, believing that the man-in-the -street matters

davethorp

blind-as-a-bat wrote: »

Maybe the ICO should make stricter rules to make the CRA's make sure the data is correct, then we would not need to check,

Now theres a thought;)

PS is the ICO on commision from the CRA's these days, just wondered:rolleyes::p

Completely agree. The CRAs being able to hold data on you without even bothering to verify that data is accurate is frankly ridiculous

We should not have to check data held about us is correct. That is the job of the Data Controllers for the CRAs

[Deleted User]

ESSENTIAL READING!

Actually, I want to speak up here because this is a subject very close to my heart and I've done a lot of research into this - which I passed onto the MSE team a couple of months ago (no reply yet though - tut tut!).


In my opinion - and I'm not going to understate this - the Office of the Information Commissioner should be the best friend of every Money Saving Expert because it's given consumers amazing powers to challenge Lenders - but no-one appears to be doing so, possibly through lack of awareness.

In 2007 the ICO issued a document for Lenders and Credit Reference Agencies which provided very specific guidance on how they should be processing YOUR data and recording things on your credit file. If my own experience is anything like other peoples, CRAs and Lenders are ignoring this willy-nilly.

The document can be found here:

http://www.ico.gov.uk/upload/documents/library/data_protection/detailed_specialist_guides/default_tgn_version_v3%20%20doc.pdf

When the Government introduced the Data Protection Act 1998 (and subsequent amendments in 2000) they placed an onus onto lenders to 'process data fairly' (this is one of several core obligations that the DPA gives). Now, at the time, 'processing data fairly' was one of the 'fluffier' obligations under the DPA, compared with obligations to hold data securely, kept it safe etc.

However - let me stress this and SHOUT IT so that all MSErs can hear:

Many consumers have grounds to challenge their lenders and force positive changes to their credit reports on the basis that lenders have not processed their data fairly.

Let me show you what I mean - and as I've said, I've conducted a LOT of research into this:

The Guidance issued by the Office of the Information Commissioner said this:

- Lenders are under an obligation to process consumers' data fairly
- Account data (e.g. loans, bank accounts) is consumer data and falls within the DPA

They then went on to define the issue of fairness and suggested the following:

- Data will only have been processed 'fairly' it the lender processes it in accordance with how other similar lenders and organisations behave.

Let me repeat this as it's very important:

If one lender holds information about accounts you have with them and then does something based on that data, then they will be held to have acted 'unfairly' if most other lenders would have not acted in the same way.

Q: Why is this really important?

A: Because of how lenders pass your information over to Credit Reference Agencies.

As the MSE original article states - and everyone knows - once a month lenders update your credit reports to show amendments to your accounts held with them. Most of the time this is GOOD - an update to show you have paid in full and on-time that month - but sometimes it can be bad - an update to show you missed a payment, or in some cases, to file a default.

Here's the absolutely 100% terribly important bit:

According to the guidance issued by the Office for the Information Commissioner, if a lender takes the decision to mark your credit report negatively (for example: to file a default), they will only have processed your data 'fairly' if other lenders would have done the same thing in the same circumstances.

Or, put another way, banks and lenders need to act consistently both internally (e.g. month on month) and also vis-a-vis other banks when placing adverse credit information on your report.

Some examples to show you what I mean

Where data is processed unfairly:

Customer X was 5 days late in paying his monthly loan payment to Bloggs Bank Plc.
Customer Y was 6 days late in paying her monthly loan payment to Smith Building Society.

Bloggs placed a (1) (late payment marker) on Customer X's Credit Reports, whereas Smith Building Society ignored this late payment - like most of banks would have - because it wasn't late enough to warrant concern.

In this instance, Bloggs Bank Plc would have processed the customer's data unfairly because it was not passing information to the Credit Reference Agencies consistently with how similar organisations would have.

Example 2

Customer X has a loan with Bloggs Bank Plc.
In January, they made their loan repayment but were late by 10 days.
In February, they made their loan repayment but were late by 5 days.
On their Credit Report, the lender put a late payment marker (1) against February's payment but not Januarys.

In this instance, Bloggs Bank Plc have processed the customer's data unfairly because they did not process it consistently month-on-month. In February the customer paid their loan quicker than January, but the bank considered February's payment to be 'late' but overlooked January's.

Example 3:

Customer X has a personal loan with Bloggs Bank Plc
Customer Y has a personal loan with Smiths Building Society.

Customer X is 2 month's late in paying their loan, but they are speaking to their lender about this as there are special circumstances and they are negotiating reduced payments.

Customer Y is 1 month late in paying their loan - and they are ignoring letters from their lender threatening them to pay.

Both Customer X and Customer Y are issued with default notices on their Credit Reports

In this instance, Bloggs Bank are processing data unfairly because their test for 'what constitutes a default' is different from Smiths Building Society.


The Guidance issued by the Office of the Information Commission makes ESSENTIAL reading because it codifies very clearly what lenders can and can't put on your credit report - and finally brings clarity to what constitutes the 'fair' processing of your personal data from the lenders' perspectives.

A default should now only be issued where there is a total breakdown in the relationship between customer and lender.

An arrangement to pay can be issued where their is a short term and temporary agreed amendment to the agreement.

If you have adverse credit information on your credit report - as many people do - then you should look at the circumstances in which that information was recorded:

Did one lender record adverse credit information in circumstances in which other lenders didn't?

e.g. if you were 5 days late in paying Abbey (and they gave you a late payment marker) but were 6 days late in paying Northern Rock (who didn't) then Abbey have processed data unfairly.

Did one lender record adverse credit in one month that is inconsistent with another?

e.g. if you paid A&L 5 days late in June (which they gave you a late payment marker for) and also 10 days late in July (which they didn't), then A&L have processed your data unfairly (and inconsistently).

Finally, why is this 'unfair'?

It's unfair because two consumers who have behaved in identical ways may find themselves in different situations when it comes to applying and managing credit, just because their lenders have acted inconsistently.

If a lender has placed adverse credit markers on your credit report in circumstances that other lenders wouldn't, then they have damaged your rating and impaired your ability to get credit - it's not fair on you if other (equally bad) debtors have better credit reports.

What does this mean?

It means consumers have another tool in their arsenal at which to clear up their credit reports. Even if you HAVE been late in making payments, you can challenge these not through the FOS, but through the Office of the Information Commissioner by making a complaint to the data controller, whose details are listed below:

http://www.ico.gov.uk/complaints/data_protection.aspx

WildWayz

How can you prove that other lenders would have acted differently?

[Deleted User]

Often, it's easy - most people have accounts or products with more than one bank.

Even then, it's easier to demonstrate that a bank has acted inconsistently internally.

ejc81

Deleted_User wrote: »

Often, it's easy - most people have accounts or products with more than one bank.

Even then, it's easier to demonstrate that a bank has acted inconsistently internally.

I had a credit card account which I was making token payments on for four or five months. They were hassling me for more but I couldn't give them it so just ignored them and carried on making the payments that I could. I then paid the full arrears after about five months and brought my account up to date. However I missed the next months payment ie one month and they defaulted me?!

How would you/could you challenge the default? In this case they obviously acted inconsistently as they had let me go for months previously when I had missed payments but when they decided to default me I was only one month in arrears! I had the account for about four years prior to this and had always managed it well.