UK credit reference agencies gather information from credit applications, financial institutions, county court judgments, the electoral roll, and other sources and compile it into a document called the credit report.
This report weighs heavily in lender decisions to offer credit card, loans, and other financial products. Credit history is the main section of the report and it contains information regarding credit accounts, including whether payments have been missed.
Credit account details remain on the credit report for six years after a credit card account is closed or a loan is repaid. Factors like human error and lender failure to provide updated information can result in errors on the credit report.
This makes it important for UK residents to review their Call Credit, Experian, and Equifax credit files at least once per year. The Data Protection Act mandates that credit reference agencies provide a copy of this report for £2.
Consumers have a right to dispute inaccurate information listed on their credit reports and have all errors corrected.
They should begin by asking the relevant creditor to investigate the issue. If the disputed information is determined to be incorrect, the creditor must revise its internal records and inform the credit reference agencies of the correction.
A one month deadline
This process usually must take place within 28 days. If the credit reference agency does not respond or act within this timeframe, the consumer should contact the Office of the Information Commissioner and request an investigation regarding a potential breach of the Data Protection Act.
If interaction with the creditor does not resolve the issue, the consumer should contact each credit reference agency reporting the item and request a credit file review. If even this does not produce a satisfactory result, the consumer may draft a 200-word Notice of Correction detailing the nature of the disagreement, which will become part of the credit file. If a credit reference agency refuses to add this note, the consumer should contact the Office of the Information Commissioner.
Some consumers find negative information on their credit files regarding family members with whom they do not have a financial association. They should request that the credit reference agencies disassociate the two parties. Whenever a consumer suspects that fraud is to blame for a credit report inaccuracy, credit reference agencies should be contacted immediately so an alert can be placed on the credit file.
On behalf of the Credit Industry Fraud Avoidance Scheme, Equifax offers a protective registration service. This issues an address-related warning that lenders receive when carrying out their searches. It advises lenders to request additional proof of identification before offering credit. In the most extreme cases of fraud, the police may need to be contacted.
Some organizations offer to repair credit for a charge but consumers should be wary of these. The Data Protection Act requires credit reference agencies to correct inaccuracies and add Notices of Correction at no charge. Free debt and financial management advice is available from charities like the Consumer Credit Counselling Service and National Debtline.