Campaign for change in the credit industry!

JayScottGreenspan

bert&ernie wrote: »

I'm afraid that your interpretation of the act is at odds with the advice offered by the Information Commissioner:

"If a lender uses credit scoring and you are refused credit, you can ask the lender to explain the main reason why. For example there may be information on your credit reference file that the lender thinks is negative. Or perhaps you did not reach the lender’s pass-mark. Lenders may also try to make sure they do not offer credit to people who may not be able to afford it. So even if you repay your existing credit accounts on time, a lender may not want to overburden you with more. You should be aware that lenders do not have to give you details of how their credit scoring works."

Source:http://www.ico.gov.uk/upload/documents/library/data_protection/practical_application/credit_explained_leaflet_2005.pdf

Thanks, that's useful. It makes sense that they don't have to reveal the commercially sensitive weights they attribute to each part of their calculation.

Nevertheless, they are obliged to inform you of the logic involved. "Your score was too low" is equivalent to "Computer says no" and is specifically forbidden by the DPA 1998. Something like "the main reason is that you do not appear on the electoral roll" is clearly a reasonable middle ground.

DPA 1998 Section 7.1.d (abridged)
"where the processing by automatic means of personal data ... for the purpose of evaluating matters relating to him such as ... his creditworthiness ... has constituted ... the sole basis for any decision significantly affecting him ... [an individual is entitled] to be informed by the data controller of the logic involved in that decision-taking."

bert&ernie

I agree that lenders should inform you if their decision was based on a particular policy rule - not being on the voters roll is a classic example of this, as is being unemployed, bankrupt, adverse bureau etc. However, in many cases the decision does come down to a score cut off. I do not believe that the lender is obliged to reveal the logic used in the scorecard and, in any case, this wouldn't mean anything to the customer. Failing the score cut off basically means that the lender has assessed the attributes of your application against a statistical model and is not prepared to take on the risk implied by this assessment.

JayScottGreenspan

Agreed. I think this is how the law is currently interpreted.

The problem is that this interpretation gives lenders an easy way to obviate their obligations under the DPA. Suppose they don't want to tell you anything under any circumstances - all they have to do is translate every single credit factor into a number and then all they are required to say is "your score was too low" (translation: "computer says no" or in other words "F off").

This is against the spirit of the DPA, and is precisely what lenders are doing. The law needs to be clarified.