Article by Jamie Mackenzie Smith - 5th March 2020

Can Right To Erasure Get Rid Of Bad Credit History?

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

In the world of Credit Reference Agencies (CRAs) 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 sharing) is the backbone of how the industry works.

Most items stay on your Credit Report for a period of six years, so it’s possible for adverse information – such as late payments, arrears, and defaults – to impact your ability to obtain credit for a long time.

Can I have my credit history deleted under the GDPR’s right to erasure?

With that in mind, can GDPR’s right to erasure let you ‘delete’ your credit history?

No, you cannot simply have your credit history deleted. This is because the right to erasure is, according to the ICO, 'not absolute and only applies in certain circumstances'. Information held for credit referencing purposes is not part of these ‘certain circumstances’ and is instead subject to other strict industry guidelines around data processing and sharing.

The guidelines provided by the Information Commissioner’s Office (ICO) are clear that information held and used by Credit Reference Agencies (CRAs) can be held for as long as it is deemed necessary. This is already one of the principles that lenders and CRAs 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.

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

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. Crucially, lenders can use Credit Reports to ascertain whether the identity of their applicant is genuine, thereby combating fraud and identity theft. Automated credit scoring has long been proven to be more accurate than manual assessment, making it easier for lenders to lend in both a profitable and responsible manner.

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 Report 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.

With that in mind, even if you could use the right to be forgotten to erase negative payment history (which you can’t), it might actually 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 or when it’s being held for longer than necessary - errors are rare, but they do happen. The ICO has published extensive guidance for disputing information on your Credit Report. If you are concerned that you might have incorrect information on your Credit Report, check out our guide on removing errors.

Where information has been recorded correctly, it will remain on your Credit 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.

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.

Anything further to the existing guidelines is unlikely to be noticed by the consumer, but small changes may 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 collection agencies 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 do apply to the Credit Reference Agencies, just as they do to all companies, and the UK’s Credit Reference Agencies will have taken very careful steps to ensure full compliance.

The right to erasure still applies to the CRAs in a broad sense (for instance, if you’ve created an account with a CRA, you have the right to delete the account), but that doesn’t mean you can expect to have a default prematurely deleted from your Credit Report by citing GDPR.

Your Credit Report information is subject to strict data retention rules that mean it won’t be removed until the required amount of time (usually six years) has elapsed; the CRAs are required to report information accurately for this full duration. Similarly, there are defined routes to dispute errors as a method to remove incorrect information, as previously outlined.

So, what can I do?

Rather than trying to erase your credit history (which you can’t do), 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 for your creditworthiness. You need to make sure everything is correct and, should you need it, get expert guidance from one of our professionally qualified Credit Analysts.

You can save time with checkmyfile, the UK’s only Multi Agency Credit Report, which collates your complete information from Equifax, Experian, TransUnion, and Crediva on the same user-friendly platform. You’ll be able to spot any discrepancies easily and get a thorough understanding of your creditworthiness.

If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 a month afterwards, which you can cancel online at any time.

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