Credit Checks

A lender can run a check on you before deciding whether or not to lend you money. There are special credit reference agencies who keep details of your credit record. Or a lender can decide whether to lend you money by getting you to fill in an application form and allocate points to you depending on the information you give on the form. This is called "credit scoring".

Each lender will have a different system so just because you are turned down by one lender this should not mean that you will necessarily be turned down by any other lenders that you go to.

Lenders do not have to tell you why they turn you down, except to tell you that you failed to reach their pass mark in credit scoring or a credit reference agency has given them information to suggest you are a bad credit risk. Credit reference agencies have access to the following:

1) The electoral roll, (this can confirm you live at the stated address).

2) Register of County Court judgments and bankruptcies
(This will show whether you have ever had a court order made against you for not paying your debts).

3) Any previous or current credit accounts that you hold with other lenders
(This will show if you are up to date with your payments).

If you have applied for credit up to a maximum of £25,000 and have been refused because of a check with a credit reference agency you are entitled to know the details of the credit reference agency involved.

However, you must write to the lender within 28 days of the last contact you had with the lender. The lender must send you the details within 7 working days.

Or if you simply want to know what information any credit reference agency has about you then you can write to one of the addresses given at the end of this FactSheet. You must send the agency a fee of £2 and give your full details.

The agency must send you a copy of your file within 7 working days of receiving your letter.

If the file is not easy to decipher the agency must provide you with a transcript in plain English. If the agency has no file on you they must tell you, but they are entitled to keep the fee. The agency must state if any data relating to you is being processed and give a description of any relevant personal data. It must also state the purpose for which the data is being processed and the type of people or companies it will be disclosed to.

The agency can refuse to comply with a request for a copy of your file if to provide it would involve disclosing information about a third party. However, if the third party consents to disclosure or it would be reasonable to disclose even without that consent the agency must comply.

If any of the information an agency holds about you is incorrect you can write to the agency to ask them to remove or change the information and they must do so within 28 days of receiving your letter and send you a notice stating they have:

a) Removed the entry.
b) Amended it, or
c) Taken no action and explain why.

If the agency refuses you can send a statement (of up to 200 words) giving your side of the story and ask that they put this on your file. This is known as a "Notice of Correction".

The agency must send a copy of this notice to each lender that requests your file. If the agency refuses then the agency or you can ask the Director General of Fair Trading to decide.

If the agency agrees to remove or amend an entry or is ordered to do so by the Director General of Fair Trading then the agency must notify each person / company to whom it sent relevant information about you in the last six months before receiving your request to amend. The agency must do this within 10 days of issuing the notice of removal / amendment or receiving a compliance notice from the Director General, or within the period specified by the Director General.

If an agency has information on your file about people in your family that you have no financial connection with you can write to the agency to explain this. This is called "Dis-association".

If the agency continues to give lenders information on your file about this other person you can ask the Data Protection Registrar to intervene.

You can also serve a notice on the agency asking them not to process or to stop processing any data on you on the ground that it would cause you unwarranted damage or distress. The agency must give you a written notice within 21 days stating either:

a) They have complied or intend to comply with your request, or
b) The extent to which they think your request is unjustified.

You can then ask the Director General to decide.

You can also claim compensation for damage and distress if these are suffered as a result of any inaccuracy of the data or any unauthorised rectification of the data. The court has power to make orders for rectification, erasure or destruction of the data as well as an order that the agency must notify third parties. This is covered by s.14 of the Data Protection Act 1988. The Data Protection Act covers computerised data as well as data held in a filing system.

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