Can Right to Erasure Get Rid of Bad Credit History?

Posted by Jamie Mackenzie Smith in Credit Reports on 3 January 2019

General Data Protection Regulation (GDPR for short) was introduced on 25 May 2018 and unless you’ve managed to avoid the internet and checking your emails completely for the past year, you’re likely to have been bombarded with messages from nervous sounding websites updating their data policies.

You could therefore be excused for thinking of GDPR simply as a convenient way of reducing the number of marketing emails you receive, but it goes way beyond that. One important aspect of GDPR is the 'right to erasure', sometimes also referred to as 'the right to be forgotten', allowing individuals to request companies remove all trace of them from their system.

In the world of Credit Reference Agencies and the role they play in modern, accurate and responsible lending decisions, being able to build and retain a credit profile of consumers via reciprocity (i.e. data sharingdata sharing) is the backbone of how the industry works.

Most items stay on your Credit Report for a period of six years, and so it’s possible for adverse information – such as late payments or more serious arrears – to affect your ability to obtain credit for a long period of time. With that in mind, could the right to erasure give you the option to force lenders and Credit Reference Agencies alike to get rid of all of your credit data to hide a poor credit history?

In short, no.

The guidelines provided by the Information Commissioner’s Office (ICO) are clear that information held and used by Credit Reference Agencies can be held for as long as it is deemed necessary. This is already one of the principles that lenders and agencies adhere to, which is why your credit history is only held and reported for six years from the date of the account closure, as this is the mutually agreed upon time required to assess an individual’s recent credit history.

Under the new guidelines, this system and timeframe very much still remains, so your information as it stands at the moment will have been unaffected by the introduction of GDPR.

Why does the information on my Credit Report need to be held?

The information about you held by Credit Reference Agencies is vital because it forms the basis of any lending decision (in conjunction with other factors such as affordability) and ensures that each application is assessed in the same informed and objective way. Automated credit scoring has long been proven to be more accurate than manual assessment and allows lenders to keep costs down.

In the modern world, if you don’t have a credit history at the Credit Reference Agencies you are very unlikely to be accepted for a mortgage, credit card, mobile phone or most other forms of finance.

This data on your Credit File contains more than just credit and repayment information - it looks at public data such as your Electoral Roll information and court records as well. This information is checked by a wide variety of sources including landlords, employers and even some insurance providers, and the absence of this information means you’d automatically fail any checks simply because you wouldn’t be found on any system.

Put simply, even if you could use the right to be forgotten to erase negative payment history (which you can’t), it would likely hinder your chances of getting accepted for credit again in the future more than it would help.

Can I remove negative information?

While it is possible to have certain information on your Credit Report removed or changed, this is only the case if the information is deemed incorrect - errors are rare, but they do happen. Where information has been recorded correctly, it will remain on your report until it is removed automatically. The time it takes for this to happen will vary according to the type of entry but is typically six years.

Why are Credit Reference Agencies exempt from ‘right to be forgotten’?

Because longstanding regulations are already in place that cover responsible data retention for Credit Reference Agencies, the ICO is satisfied that the standards in place are fair and reasonable to consumers, so few additional changes are needed.

Anything further to the system already in place is unlikely to be noticed by the consumer, but is likely to have gone on behind the scenes of each Credit Reference Agency. GDPR also applies to internal data handling, and it is something that most companies will have had to deal with on some level.

As early as 2014 Credit Reference Agencies and Debt Collectors were quick to point out the potential issues of being able to request all data held on an individual is wiped clean, which is why statements from the ICO have been clear in outlining that the way credit data is handled will not be affected.

Does that mean GDPR doesn’t apply to Credit Reference Agencies and lenders?

The principles of GDPR still apply, the same way that they do to all companies and the UK’s Credit Reference Agencies will have taken very careful steps to ensure full compliance.

So what can I do?

Rather than trying to erase all credit information held on you, you’re much better off being in a position where you know exactly what is held about you by the UK’s Credit Reference Agencies and what it means in terms of your ability to get credit. You need to make sure everything is correct and should you need it, get expert guidance from one of our professionally-qualified Credit Analysts.

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