Protecting your personal credit report is absolutely vital if you expect to apply for a mortgage, car loan, personal loans or credit card.
Ensuring what is reported on a credit report is accurate is the responsibility of each lender and the duty of each consumer to keep a watchful eye on what lenders say about them.
Who knows about how I pay my bill?
The personal credit reporting system is managed by the Irish Credit Bureau, more commonly referred to as the ICB.
Lenders who are ‘members’ of the ICB both report to the ICB and access data from the ICB. Simply, Lender X wants to check the loan repayment history of Consumer Y. If they are not members of the ICB and they do not report their data to the ICB, then they cannot access data from the ICB.
Which lenders are members of the ICB?
The actual list of credit providers is extensive and broad. For example, while one would expect all of the main banks to be members of the ICB (which they are), there are also some less well known members. For example, that sofa one purchased on credit, 0% for the first 6 months at the furniture store, guess what, the company that makes that 0% possible is a member of the ICB. So, if you fail to pay off that nice sofa, it is likely to be reported to the ICB. Remember that taking out a loan for the the sofa involved a credit application at some point and credit transactions are reported to the ICB. So remember, enjoy the sofa but pay that bill!
What information is available about me?
A lot! Anything that helps lenders identify who you are and which ties you to any borrowings you may have taken out will be on the ICB. This includes:
- Contact details (your mobile phone number is a great personal identifier)
- Occupation (you probably reported this to some creditor at some stage)
- Number of times you applied for credit recently
- Creditors you applied for credit to recently
Lenders that approved you for a loan
- Type of loan creditors approved you for
- Amount of loan creditors approved you for
- Monthly repayments of loan
How well you paid each loan
- Number of times you were 30 days in arrears on repayments
- Number of times you were 60 days in arrears on repayments
- Number of times you were 90 days in arrears on repayments
- Loans defaults where partial payments were made
- Accounts that were settled for less than the full amount
- Pending litigation
- Judgements (this is where a court of law has judged against a consumer for an amount of money, could be a disputed loan, credit card bill). This will show up on a personal credit report. Loan restructuring – it is now reported that creditors report any loan rescheduling or restructuring (for lower monthly repayments). However, it is not clear if all creditors actually do this or it just a few. This area is still evolving.
Credit Score – I see one on my ICB, what is it?
Great question. This is probably the future of Credit Reporting in Ireland. Credit scoring is an algorithm that has been developed by a company in the US called Fair Isaacs. It is a complex code that assesses an individual consumers propensity to default on a loan obligation. In the US, it is called a FICO score. Here in Ireland, it is simply called a credit score. Today, I suspect that the data feeding into the Credit Score is not as robust as it is in the US, but expect this to change.
Credit scoring is a lot more than simply an output of how one paid their existing credit. It also looks at other issues, such as:
- The most recent credit applications
- Frequency of credit application
- Credit usage (are you always maxed out on your credit card)
- Anomalies – do you pay off loans in advance of getting new ones to try reduce your reported net outgoings. It’s referred to as ‘flipping’ in some industries.
So, credit scoring is here to stay. It is very complex and in the US, it is now a way of life for automated underwriting.
Can others see how I pay my bills?
Only creditors who are members of the ICB can access the ICB for data on consumers. However, in other jurisdictions, non-creditors can also access personal credit reports. These can include hospitals, employers (in certain situations) and even landlords to assess whether or not you may do a ‘runner’ and not pay them. No chance of that here in Ireland…at least for now!
What else to watch out for:
Lenders in Ireland are likely to question you if you have a spate of loan applications to a number of creditors in recent weeks. They will want to know what you made those applications and what the outcome was. Again, lenders will look through every speck of data to assess whether or not you can afford the loan you are applying for and whether or not you will really be able to pay it off, on time and in full.
That loan or HP you forgot.
Yes, sometimes people forget about things which is why it’s a good idea to check your ICB (and that of your spouse / partner if the mortgage application is on a joint-basis). Sometimes, people forget. Maybe there was a small loan or HP agreement, even if being paid as agreed, will have an impact on borrowing ability.
Pattern of opening and closing accounts. Some consumers may feel that they can ‘trick’ the credit reports by applying for credit to pay off another loan BEFORE they apply for that mortgage will increase their chances of being approved. Well, in theory, this could work but lenders will question this.
What about personal and family loans?
Loans from family members do NOT appear on the ICB.