Thursday 14th of January 2010
The Information Commissioner’s Office (ICO) has asked Britons to make sure their credit references are up to date for 2010 so that lenders can access the correct information when assessing whether to accept a loan or credit card application.
According to the ICO, credit will be used by millions of people to help see them through the economic downturn, although instead of getting into more debt, some borrowers may decide to start repaying what they owe through a plan such as an individual voluntary arrangement (IVA).
While an IVA will be on your credit file, it could be better for your long-term financial security as taking on more debt and falling to repay it could leave an even blacker mark against your name.
The ICO has raised concerns that incorrect information on credit files showing a person’s financial situation to be worse than it actually is could mean lenders see them as a risk and will be therefore less willing to lend them cash.
"Out of date or wrong information in your credit file might not only stop you getting the credit you need but could have further damaging or embarrassing consequences," says David Smith, deputy commissioner at the ICO.
"By checking your credit file regularly you can spot anything that’s wrong and act swiftly to correct it," he states.
If a credit reference is poor - and it is because of households owing a number of different lenders, rather than a mistake - then an IVA could prove to be one answer.
IVAs can merge different credit card and unsecured loan repayments into one single, monthly repayment, as well as freezing interest rates.
This should enable Britons to better manage their debt and, in the future, could see them enjoying a better credit rating.
Although an IVA will leave a mark against a name, it could be more ideal than struggling with debt until the last resort is required - bankruptcy.
By Neil Burton
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs 'require discipline from cash-strapped consumers'
