The Data Protection Act requires companies and individuals who process and retain information on their customers to inform the customer how the information will be used and to what purpose it will be put. The Data Protection Act applies to not only computer records but also to paper records on filing systems. The following describes how your information will be processed.
When you apply for a loan or mortgage your credit / mortgage broker will use the information to undertake certain work. Underwriting and processing your application. To undertake searches at the credit reference agency or agencies. These searches and any other search made in connection with an application made by yourself and any other member of your household will also be shown. The search may reveal multiple searches which may adversely affect your credit profile and result in difficulty in obtaining credit. The credit reference agency may already hold information which links you to another party. i.e. your spouse or another member of your family. Where linked information is revealed the loan or mortgage application will be assessed taking all linked information into account. Where you have declared that you are linked to another person(s) you are confirming that you are entitled to disclose information about that person(s) and/or any one else referred to by you. Furthermore that you authorise the broker and any Lender which is party to the application to search, link and or record at the credit reference agency about you and or other parties referred to by you.
To offer you a range of products that are available we may pass your information on to a lender(s) we believe may be willing to advance funds. Pass your information to another credit broker, where your existing credit broker many not be able to arrange finance. Pass your details onto a credit reference agency or agencies to review your application for finance. Write to you in the future to offer products that we believe would be of interest to you.
Lenders use your information in processing your application. Lenders will make greater use of the information you provide. The documents a lender provides will include a statement advising you what they will do with your information and how they will make use of it in the future. Where you will find this information will vary depending on the loan or mortgage product. In the case of loans it is usually near the signature box. For mortgage products it in normally found in the information packs which can be quite extensive. Lenders will check the information you have supplied on your application with the data held on the credit reference agency file. The lender may search on more than one occasion or to more that one credit reference agency. Every time a search is made it is recorded by the credit reference agency on your file and disclosed to organisations that carry out a later search. Lenders will use the data held on the credit reference agency files to underwrite your application and some may use this data within their credit scoring systems. Credit scoring systems vary from lender to lender according to the risk they are prepared to accept. (Not all lenders use a credit scoring system). In essence credit scoring is a method of quickly assessing the customers ability to repay the loan or mortgage. It applies points to various pieces of information such as age, occupation and time in your job. It also scores credit reference agency information such as whether you are shown on the voters roll or how you are paying existing or have paid passed credit agreements. A pass mark is set by the lender and if the total of the individual scores exceed the pass mark the loan or mortgage is generally approved. Lenders will check the information you have provided with credit reference agencies and also use other agencies to confirm the information you have provided is true and that it is you, not someone else making the application. You must ensure that all information provided is true and accurate. If the lender suspects it has received incorrect or fraudulent information it will check with the fraud prevention agency. If you give false or inaccurate information and the lender suspects fraud it will be recorded.
Loans and mortgages are always granted at the discretion of the lender and on occasion lenders will decline an application. There can be a number of reasons for this. The lender may believe that you do not have sufficient income to repay the loan or in the case on a mortgage there is insufficient equity in your property to cover the advance. The reason why you have been declined may not be apparent to you and your lender does not have to tell you why your application has been declined. However if you enquire they will advise you of the name and address of the credit reference agency they use free of charge. If you have been refused as a result of a computerised credit scoring system you can ask how their scoring system operates (applies to computerised systems only) although the lender may charge a fee for this information. You have the right to a non automated review of the lenders decision.
All lenders and brokers have a legal duty to keep all information they hold accurate and up to date. All companies not only lending companies; keep information about their customers on their own records. The information lenders maintain includes information you provided on your application form, how you are paying your account as well as any other products or services you have purchased from your lender. They will maintain the performance of your account for the life of the agreement on their records and will pass this information to one or more credit reference agencies. This information will allow them and others organisations to make decision about providing credit and credit related services including motor finance, home improvement finance, insurance both life and term insurance for you and other members of your household. Information may be provided to other agencies to help lenders and other organisations to trace debtors, recover outstanding debts, prevent fraud and to confirm identity to prevent money laundering. Any differences in the information either you or your broker has provided that it later discover to be different than that originally disclosed is likely to be recorded. Lenders use this information to analyse their business relating to credit risk, customer profiling, insurance penetration and claims and fraud. The analysis may be done by them or by a third party contracted to undertake this work. Where a contractor is use, the lender is required to ensure that your data is properly secure. Some lenders may also need to provide information about you and your account to their banker or funding institutions, insurers and re-insures of funding for their borrowing arrangement and any other products they have provided to you. Should your broker or lender intend to use your information for any purpose not included above it must be disclosed to you.
It must be remembered that credit reference agencies do not give opinions on whether a particular person is credit worthy or not. That is a decision for the lender as the information on the credit register is only part on the information the lender will use when making an underwriting decision. Neither do credit reference agencies hold ‘blacklists’ of people. However they do have a duty of care to keep the information up to date and accurate. All lenders and brokers use one or more credit reference agencies which hold credit data on individuals in the United Kingdom. The information held includes electoral roll data (voters roll information) register of county court judgements, bankruptcy and involuntary arrangements. In addition they hold information on existing and past credit agreements and also current and past performance of those credit agreements. Information is also held on credit cards and store card transactions and their performance. Where there is and element of slow payment a default notice will be shown on the credit search. In addition all credit searches are recorded. Information on loans and mortgages is usually held for 6 years, credit cards and store cards for 2 years but voters roll information is held for much longer. Lenders share this information in order that they can make an accurate decision when underwriting an application for credit. The main credit reference agencies are:
Consumer Help Service
Commercial Credit information
Consumer Service Team
PO Box 49
Should you wish to see the information held on you on your credit reference agency file you can do so by writing to the appropriate credit reference agencies enclosing a fee of £2.00. The agency must respond in 7 working days. If your credit reference agency file contains information about other people with whom you have no financial connection or the information is incorrect you may ask for this information to be removed, corrected or a note attached to the file to explain why you believe the information to be incorrect. No credit reference agency will remove correct information.
Council of Mortgage Lenders Repossession Register
The Council of Mortgage Lenders Repossession Register is a register of properties that have been repossessed or have been given up voluntarily and will be apparent to its members (mainly mortgage lenders) on the credit reference agency file.
CIFAS reports fraud and fraud avoidance to its members. The report contains information indicating fraud, attempted fraud which is notified to lenders. The information may not relate to you but may relate to person(s) that have tried to impersonate you or use you stolen information to try to obtain credit. This data is now used by most lenders for a range of financial products in order to make credit decisions.
Hunter register hold information on loans and mortgages approved and where funds have been released. It compares the information and analysis the information to trace fraudsters who have obtained credit dishonestly. This information is used to protect customers and warn lenders of potential fraud.
This is used to notate that the customer has ‘Gone Away’ from the home address and the agreement is currently in arrears. Alternatively it may indicate that the customer who previously absconded has now been traced to a new address.
Agencies, Lenders and Brokers
If you wish to see what information is held on you on any of the above you can request a copy. They will inform you where they found the information. You must write to them to obtain a copy of this information and they will charge a small fee. They will reply within 40 days once they have received the fee.
The Information Commissioner
The Information Commissioner provides a leaflet which explains how to request changes to you credit file. It includes a sample of letters and details various actions you can take to amend a file. To obtain a copy of this leaflet write to:
No Credit Leaflet
PO Box 99