Reform of credit ratings and records

LadyGMadameToThee

Does anybody else feel that the current system of heavy reliance on CRA is out-dated and could actually be stifling the economy? I currently have an excellent rating but I do believe that it's very unfair to keep defaults and ccjs on people's files for a period of 6 years. When and why did they arrive at that time period? Isn't it time that government accepted that the boom and bust cycle of a capitalist society inevitably leads to most people struggling with finances at some point in their lives and, therefore, punishing them for almost a decade, not only holds people back and disincentivises them from being aspirational, but it also may well be damaging the economy?

dumpyboy

A stricter enforcement of the people who report to cra is needed, and a uniform approach of how it is reported is needed

DCFC79

Dont see anything wrong with the current setup but as to how the 6 years was decided upon I'm not sure, its an number to choose.

Thrugelmir

LadyGMadameToThee wrote: »

Does anybody else feel that the current system of heavy reliance on CRA is out-dated and could actually be stifling the economy? I currently have an excellent rating but I do believe that it's very unfair to keep defaults and ccjs on people's files for a period of 6 years. When and why did they arrive at that time period? Isn't it time that government accepted that the boom and bust cycle of a capitalist society inevitably leads to most people struggling with finances at some point in their lives and, therefore, punishing them for almost a decade, not only holds people back and disincentivises them from being aspirational, but it also may well be damaging the economy?

The issue lies with the availability of credit. Those that cannot pay being subsidised by those that do. Hopefully regulation will drive down interest charges and force financial organisations to operate better business models.

Six years is not a decade by the way. If you don't want a bad credit record then don't over borrow. Save before you spend.

PixelPound

Part of the problem is who can report to CRA's, instances of energy firms being reported on here as offering customers repayment plans when coming to the end of a price fix but noting telling them such a plan will result in a default is shocking.

As far as CCJ's go, surely 6 years is fair, since providers need to fairly assess the risk. Reducing down to a few years would increase the risk and so costs to most people as those who got CCJ's could easily get more credit after a couple of years.

Mobeer

It would be better to have no limit on how far back records go. The current idea of removing information after an arbitrary limit just increases uncertainty and hence hurts those with good records.

Thrugelmir

Mobeer wrote: »

It would be better to have no limit on how far back records go. The current idea of removing information after an arbitrary limit just increases uncertainty and hence hurts those with good records.

Any company can keep it's own list of "never do business with this customer ever again". Errant behaviour can catch people out when they least expect it. As you never know who is behind the finance deal you are applying for.

SnowTiger

LadyGMadameToThee wrote: »

Does anybody else feel that the current system of heavy reliance on CRA is out-dated and could actually be stifling the economy?

What alternative do you propose? Taking an afternoon off work, putting on your posh togs and trolling off to the bank to impress the bank manager every time you want a small loan, to extend your overdraft or apply for a new credit card?

What evidence would a lender use to determine whether you're good credit risk or not?

LadyGMadameToThee wrote: »

I currently have an excellent rating but I do believe that it's very unfair to keep defaults and ccjs on people's files for a period of 6 years. When and why did they arrive at that time period?

An arbitrary figure. Perhaps based on when debts become statute barred throughout most of the UK. If it was, let's say, two years you would end up with punters having squeaky clean credit files and oodles of hidden enforceable debt.

LadyGMadameToThee wrote: »

Isn't it time that government accepted that the boom and bust cycle of a capitalist society inevitably leads to most people struggling with finances at some point in their lives and, therefore, punishing them for almost a decade, not only holds people back and disincentivises them from being aspirational, but it also may well be damaging the economy?

Isn't being aspirational what gets many people in to debt?

Six years is far from a decade.

What alternative is there? No CRAs? Resetting the data every couple of years? What do you think would happen if we could all borrow money, not pay it back and have records of our debts deleted after two years?

SnowTiger

Thrugelmir wrote: »

Any company can keep it's own list of "never do business with this customer ever again". Errant behaviour can catch people out when they least expect it. As you never know who is behind the finance deal you are applying for.

We've already learned that Barclaycard follows the rule: fool us once, shame on you; fool us twice... that ain't gonna happen.

SaiK86

6 years is actually not that bad... it's around 20 years in Switzerland!

surreysaver

Mobeer wrote: »

It would be better to have no limit on how far back records go. The current idea of removing information after an arbitrary limit just increases uncertainty and hence hurts those with good records.

In fact, if records go back further, it could show those who can dig themselves out of a hole.