Credit files & credit scoring

mr.ton.

Does anyone else possibly agree with me in saying that credit files are not worth the paper they are printed on & that credit scoring is not worth anything either?
I mean firstly..how long has the whole credit file/scoring system been around for?
Secondly - who are the credit reference agencies answerable to exactly or are they just a law unto themselves effectivley?
The general public certainly seems to have no control over them as it stands (as far as im aware?)
It wasnt that many years ago that everyone was terrified of debt collection agencies & thought they had power to obtain money out of the individual.
That myth has now been totally shattered thanks to various consumer forums like this.
So isnt it about the time we turned our attentions to taking on the credit reference agencies & shattering the many possible myths surrounding them as well?

Geebee

They obviously are worth a lot more than the paper theyre written on, they can be the difference between you getting credit... and... NOT getting credit. Effectively they could be worth thousands.

GB

mr.ton.

Geebee wrote: »

They obviously are worth a lot more than the paper theyre written on, they can be the difference between you getting credit... and... NOT getting credit. Effectively they could be worth thousands.

GB

Yes i appreciate that as thats how the status quo is now surrounding it all.
However, i refer you back to my example regarding debt collection agencies.
It wasnt that along ago that everyone thought that they were these almighty/all powerful organistations who could do this,that,the other - how wrong that turned out to be.
I suspect that if a similar consumer effort is applied to the credit reference agenices in the future - then the same might happen

WRINKLES

if ther were no credit reference agencies how would a lender know whether someone was a good risk or not.

Tixy

I think the credit reference agencies are a good thing. If they show I have managed my credit accounts well then it will help me get better credit rates in future. They also allow me to check whether ID theft has been commiteed against me.

It is true that sometimes (relatively infrequently) they may contain inaccurate information but the CRAs only report what is told to them by a creditor or owner of a debt or a potential lender (in the case of a search). Therefore if incorrect information is on there then it is not actually the fault of the CRA. In an ideal world it would be good if they could get proof from every lender who wants to put something on the file, so if a creditor wants to issue a default it would be ideal if the CRA could check to see a legally correct default notice and a consumer credit agreement (or service agreement etc). However the reality is that this is not and would never be practical.
That is not to say I think it is fair or reasonable how far some people have to go to get incorrect entries corrected - but I think any penalties for this incorrect information should be metered out to the creditor who supplied it not the CRA.

I also think it is a good thing that if someone has CCJs these are recorded on that person's credit file - this ensures that they cannot get easy cheap credit soon after those CCJs, personally I think that is a good thing for the potentials lenders, the person and for everyone one else (as obviously bad debts push up the general cost of consumer credit)

There are plans to change how long information is stored on your credit file changing it from 6years to 3years, to bring the UK in to line with the much of the EU. That seems reasonable to me.

3Dogs

mr.ton. wrote: »

Yes i appreciate that as thats how the status quo is now surrounding it all.
However, i refer you back to my example regarding debt collection agencies.
It wasnt that along ago that everyone thought that they were these almighty/all powerful organistations who could do this,that,the other - how wrong that turned out to be.
I suspect that if a similar consumer effort is applied to the credit reference agenices in the future - then the same might happen

It does not matter what we the people in debt or otherwise think about Credit Reports, it is what lenders make of the information that counts in deciding whether a person is granted credit or not, and how much credit they could be offered singularly and in total. The banks/lenders have to check out the credit worthiness of potential clients !!!

Tixy

What system would you propose instead? assuming you are not of the opinion that all consumer credit should be stopped how else do you think lenders should assess the risk of lending to an individual?

Oh by the way I agree that paying any of the CRAs for a 'score' is nearly always pointless and a complete waste of money.

mr.ton.

I appreciate & respect the opinions of the responses so far.
But who regulates these CRA's exactly or do they just regulate themselves effectivley?
I know we have the likes of the OFT etc...but shouldnt they be more regulated by government - if not already????

Tixy

As much of the information comes under the data protection act they are regulated by the Information Commissioner, who are the independent authority dealing with data protection. They are in turn responsible to the Ministry of Justice as well as to us, the individuals.

Also if you have a complaint about the CRAs you can complain to the Financial Ombusdman.

DarkConvict

They have to answer to the ICO under data protection act if they mess things up. But the point this they only list information provided by creditors and they have no grounds to check each piece of information received. Really only the creditors are to blame for wrong information.

Personally the changes i would like to see is.

1) Just 1 CRA, preferably run by either the FSA or ICO.
2) Searches are not publicly visible, they can only be seen by yourself.
3) When a credit application is made this is recorded. (An application not a search!)
4) Easier to dispute information, you can put in notes about an entry as you see fit, it only requires moderation for language purposes. Any entry with a note against it is not automatically returned to creditors for the computer, must be evaluated by a human.