Give People Control Over Their Own 'Credit Report'
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Me, my partner and our almost two-year old daughter currently face a pretty grim situation. Having been given notice on our current rental property, we're desperately looking for a new home. '30 days to find somewhere else?' 'No problem, we both work, we're good tenants, great landlord references'...
...Then the Estate Agent says, 'You've failed the Credit check'
Possibly the most important three digit number in your life - your Credit Score.
It's the number that decides whether or not you can get a contract mobile phone, have finance for a new car, get a credit card, have a catalogue account - oh yes, and really important stuff like, whether you can have a mortgage and whether or not you can rent a home.
Yet, this all important number, and the agencies that cook up these three magic digits alongside your more detailed Credit Report, are pretty much unregulated, unaccountable and inconsistent.
Allow me to explain...
Credit reference agencies, be it Experian, Callcredit, Equifax or what-have-you, create a credit report by compiling information gathered from a number of sources - creditors (credit card companies, catalogue companies, loan companies - any establishment that offers a credit facility) and databases such as the Electoral Roll.
Here's the problem...(s)
- Banks, Money-Lenders, Estate Agents, Creditors each sign up to different Credit Reference Agencies
- Credit Reports are inconsistent between Credit Reference Agencies depending on their sources of information. Information that appears on one Credit Reference Agency's report may not appear on another Agency's.
- Mistakes on a Credit Report are seemingly very difficult for the individual to rectify and can take weeks even months to put right. Thousands of complaints about this get forwarded to the Financial Ombudsman Service every year which increases the time it takes to resolve and causes much stress to the individual. Yet, the Credit Reference Agencies don't seem to be in too much of a hurry to troubleshoot, streamline and reduce the length of time rectification processes take.
- Mistaken identity is commonplace.
- Mistakes can have a massive impact on financial and living conditions for the individual concerned.
- Credit Reference Agencies are seemingly unaccountable for any mistakes and are not reprimanded for them despite operating under legislation outlined in the Data Protection Act (1998) which requires information about identifiable individuals to be accurate.
- It is too easy for companies to apply a CCJ without the individual even knowing until it appears on their Credit Report.
- Although Credit History on an individual's report should only go back as far as 6 years, loopholes mean that creditors can 'sell-on' alleged debts to 'other companies', therefore renewing the start date of the alleged debt and impacting the credit score.
- One coherent Credit Report Either Credit Reports should be collated and created by one provider alone so that all entities granted access to it have the same information or, the individual's bank should be responsible for creating and holding the report. The later would mean that if persons of the same name shared the same date of birth or address, they can also be identified by their individual bank details
- Length of time it takes to rectify mistakes should be significantly reduced Should the Agency be informed by an individual of a mistake, it should reasonably take no longer than a week to rectify. The formal process should be quite simple e.g. Individual contacts agent and specifies mistake - Agent contacts creditor and gathers further information and evidence to identify initial amendment was correct or establish that it was in fact incorrect - Agent amends report as needed.
- Accessibility One's own credit report should be super easy to access as should being able to contact the report's provider.
- There should be a limit on how many times a debt can be sold on
- Further effort should be made to ensure information regarding identifiable individuals is correct This falls at the hands of creditors themselves who should have sound proof of which individuals are using their services.
- Credit Reference Agencies should be held accountable for mistakes and breeching Data Protection In any other job, a breech of Data Protection would result in dismissal - as should it for those who work at Credit Reference Agencies or, if identity of person responsible for breech is unknown, the agency should be reprimanded.
- Access to Credit Reports should only be granted to organisations who offer prospective lending/credit facilities. Renting a property isn't a Credit or lending facility. Nor are Utilities. Both of which are deemed as necessities when an individual defaults on a credit account and subsequently has to present their outgoings. Consistent and regular rent payment and utility payment does not enhance an individual's credit score therefore why should a credit score be used to inhibit an individual's right to rent a home or have access to utilities? Some might argue that a Credit Report gives insight in to whether an individual is likely to pay the rent - however, there is a difference between not paying a catalogue bill because you are struggling financially and not paying to keep a roof over your head. Reliability with regard to rent and utility payment should be assessed by previous Landlord reference and/or proof of income. Otherwise, assessment of an individual's ability to rent a home becomes an exercise in elitism.
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