Borrowers turn to credit agencies for help
Credit reference agencies are increasingly acting as intermediaries in disputes between customers and lenders, according to one of the UK's three main agencies.
With more potential borrowers being turned down by credit card and loan companies, credit agencies can help solve problems if credit history details are wrong.
Credit reference agency Equifax has said that a 'substantial' amount of its UK customer base contacts it after they have been refused a loan.
Neil Munroe, external affairs director at Equifax, explains that customers will ask it to alter their credit history or plead their case for a loan with a lender.
If the agency does so, it will allow the bank or lender 28 days to respond to its query, after which it will take the side of the customer.
This is in contrast to the US, where a significant lawsuit is being waged against Equifax and TransUnion by savers who allege the agencies failed to update their records to show a debt had been discharged.
This can have a major impact on a customer's lifestyle in the US, where credit files carry greater importance when seeking credit than in the UK.
However Equifax UK is keen to stress that such a situation will not emerge here, mainly because agencies here are seen less as agents of the credit industry and more willing to listen to customers' disagreements.
Equifax, like any other credit reference agency, cannot compel a bank or building society to lend money to a customer. However, if a particular part of a credit history is preventing a borrower from getting a loan and they can convince the agency this is an anomaly, it can place a 'notice of correction' on the file explaining the situation to prospective lenders.
Munroe said: 'It's an image thing. Agencies in the US are seen as acting more on behalf of the credit industry; they are seen as the tool of banks as they snitch about your credibility to the people you're trying to borrow money from.
'All they need to do to prevent these lawsuits is to get the message out there that agencies are for savers too. We're here for you to check your history as well and perhaps use to safeguard against fraud by checking to see if any accounts have been opened in your name.
He added that legal confrontation on the scale of the US concerning credit reference agencies is unlikely as customers here tend to know less about and are more trusting of the credit industry.
Agencies in the UK cannot be sued for mismanaging consumers credit files as they only use information on loan from banks, whereas agencies in the US own the data and can therefore be taken to court for mismanaging it.
There are 10-12 pieces of lending information per individual in the UK, consisting of 400m different credit accounts and 30m individuals.
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