Let us just take a look inside the system.
Although this informational warehouse is only half of a picture, its role is crucial. The customer’s entire credit history is stored in a confidential manner. This secured file about potential borrowers, serves lenders when deciding about a credit. You ask what could possibly be so precious that influences such a judgment. Well such raw materials like…everything within a previous credit history; with other words a former credit report
The other half depends upon the precise information the customer provided when applying with an application form, last but not least the type and volume of the borrowing.
The intervention of a credit reference agency is not automatic but mediated. None of the agencies will ever get involved in inquiries, unless it is the customer’s request. Lenders generally take action based on your consent. This is indispensible when signing any credit agreement. It is a false belief to accept that somewhere a blacklist is kept with names of people who shouldn’t be given any type of credit.
Within certain criteria all of the population could receive a positive answer for a credit. There is really no need to be impatient about shop and loan companies’ tendency to get a precise view on your credit history. Another right of each person is to obtain a so called personal credit reference file for an inappreciable sum of money, by writing few lines to the credit bureau. The document should contain some very precise and relevant data, such as your full name, address including postcode, a list of addresses in case you have been living elsewhere in the past six years, date of birth and proof of your payment towards the agency ( under the form of postal order or cheque ).
The end result of the credit reference agencies’ activity will be then materialized under the form of a credit file; the latter one will tell lenders about:
- public record information about your person - such as: court judgments or any sign of bankruptcy
- details of an active credit agreement: up to date or late payments for example
- further credit checks: reveal signs about an over-stretched customer, possible identity fraud or even desperation for a credit.
This credit file can suffer from lack of data, in the worst case or you might be facing distorted information. For example more family members have asked for a loan and each are living at the same address. In this case it is highly recommended to have your credit file “disassociated” from the rest. It is enough to make your application at a main credit reference agency and in short time this will notify several others.
Let’s take the worst case scenario: incorrect information slipped into your file. The Consumer Credit Act might be the answer to solving this case. It guarantees your right of correcting inexact info. The feedback from the agency should reach you in a maximum of 28 days. If you still find yourself discontented, a note made of not more than 200 words will be formulated and added to the credit file, thus it will be completing drawbacks.
Practically any dispute of this nature is strictly between the agency and yourself. This small circle can only survive under certain rules; the most important one is confidentiality.
This strict rule is meant to consolidate the confidence between the two entities. The credit bureau is only entitled of providing credit report related information to the exact institution where the borrower has made the application for a certain type of credit (service credit, loan, credit card, installment credit; etc).
The financial institution has absolutely no right in using the data in another way than it is intended. Nevertheless there is still an exception from the rule, namely disclosures set by the Federal law, police or any institutions of the law.
Fixing the main ideas would consolidate our knowledge about the above subject. In this order of ideas, each of us has to remember that credit bureaus are great tools for both the customer and lender: lenders will convince themselves that they have made arrangements to assure a reduced credit risk, whereas borrowers can obtain low rates and gain their access into the banking sector.
Both entities can benefit from positive data sharing. The two must rely on each other or else the credit will stay at the bank.
Analyzing the global economic development, those who are aware of the proverb - “You cannot climb a tree without support” - will become lenders themselves; those who defy it; will stay borrowers for ever.