Credit ratings

Credit reference agencies

Several different agencies compile information about debtors. These are known as credit registers, credit reference agencies or credit bureaux. They are available to be consulted by lenders to see if you, as a potential borrower, have ever defaulted on loans.

The general aim of these agencies is to help lenders assess your ability to repay any future debts. The agencies do this by giving their members access to your debt history and your history of repaying those debts.

Credit agencies may publish lists of judgments registered in the Central Office of the High Court (for example, such lists are published in Stubbs Gazette and some newspapers). This is public information. You have no control over its publication or the use which is made of it.

Credit reference agencies in Ireland

Credit reference agencies collect negative information and positive information about consumers. Negative information is information about any default on credit repayments, such as arrears, missed payments and bankruptcies. Positive information is information relating to your overall financial standing such as your overdraft limit, the limit on your credit card and records of your repayments.

The main credit reference agency for individuals in Ireland is the Irish Credit Bureau (ICB) but there are several other agencies, mainly dealing with businesses. The ICB compiles a private database of information supplied by its members. It includes information on a wide range of loans including personal loans, mortgages and credit card loans. That information is available only to its members.

The members of the ICB are the main financial institutions, including some credit unions. Local authorities are also members. Membership does not include utility companies or retail outlets.

The ICB does not make a decision on whether or not you get a loan. The information available from it helps the financial institution to decide whether or not it should lend to you.

Information about you

There is no information about you on this database if you have had no active loans in the past five years or if your lender has not provided that information to the database. If there is information about you in the database, it is retained in an individual credit report. The information in your credit report includes:

• your name, date of birth, address(es) used by you in relation to financial transactions
• the names of lenders and account numbers of loans you currently hold, or that were active within the last five years
• repayments made or missed for each month on each loan
• the failure to clear off any loan
• loans that were settled for less than you owed and
• legal actions your lender took against you.

The system records when a borrower has consulted it so you can find out if this happened in your case. Every financial institution that is a member of the ICB is required to provide you with details of any credit reference agency it has used when assessing your application for a loan.

Consent

Your consent is required for the provision of information about your credit history to the ICB. However, it is sometimes the practice that such consent is an integral part of your credit agreement so you may not notice that you have given consent.

You have the usual rights under data protection legislation to access the records held about you by credit agencies and to have incorrect information rectified. You may ask the agency to provide you with a copy of the personal information it holds about you. If this is inaccurate, you may ask the agency to correct it. If you are not satisfied with how the agency deals with you, you may appeal to the Data Protection Commissioner.

Contact details for the ICB are in 'Obtaining a copy of your credit record' below).

Requirement to consult information on databases

The EU Directive on consumer credit agreements (Directive 2008/48/EC) which is implemented in Ireland by SI 281/2010 - European Communities (Consumer Credit Agreements) Regulations 2010, provides that creditors, before agreeing to give you a loan, are obliged to assess your creditworthiness based on sufficient information obtained from you and, where necessary, from a database of such information. It also provides that, if you are refused credit because of the information found on the database, the creditor must immediately give tell you this and give you particulars of the database used. This legislation applies to personal consumer credit agreements for amounts between €200 and €75,000 and it does not apply to mortgages. In Ireland, it will not apply to credit unions until December 2011.

Regulation of credit agencies

At present, there is no regulation of credit rating agencies or credit reference agencies. There is an EU proposal to regulate credit rating agencies.

Credit scoring

Credit scoring is a technique developed by financial institutions which places applicants for credit into different categories. Credit scoring is carried out by financial institutions and by credit reference agencies. In the case of credit reference agencies, your credit report is given a credit bureau score. This is made available to a lender on request (if the lender is a member of the credit reference agency).

If you have a good record of repaying a loan, then you get a high score. You get a low score if your repayment record is poor. The only way to improve your credit score (more commonly called credit rating) is to improve your repayment record.

Other credit rating agencies

International credit rating agencies (for example, Moody’s, Fitch’s, Standard and Poor’s) generally assess business debts and have little relevance to consumers. There are some other credit reference agencies in Ireland, which are also mainly business-oriented. However, the ICB is the main one that is relevant for consumers.

Obtaining a copy of your credit record

You can get a copy of your credit record by contacting the ICB at (01) 260 0388, or by downloading the application form. The completed form should be sent with payment of €6 to:

Irish Credit Bureau, ICB House, Newstead, Clonskeagh Road, Dublin 14