Brianna Parkins: pay attention to your credit history — it could be the key to unlocking a future loan

Some people only find out about the skeletons in their credit history closet when they apply for a loan, whereas others don’t bother in the first place because they are already fearful of the ghosts of missed repayments past coming back to block their applications.

Ger (not his real name) had put off applying for a home loan with his partner for years because he was convinced an unpaid phone bill on a lost handset in his 20s would ruin his credit score. “A debt collector had got involved and everything so I just thought: why bother?” he says.

Except his bill was never on the credit register because utility arrears are generally not included.

Ger also doesn’t have a credit score – a term popularised by American TV and movies referring to a number assigned to a consumer that determines whether they have good or bad credit history.

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In Ireland, the Central Credit Register does not issue a number nor does it approve or refuse loans.

The privately operated credit rating service, the Irish Credit Bureau, which was led by the main banks, was never comprehensive in the data it captured and was wound up in 2021. The new register, which is operated by the Central Bank of Ireland, started keeping records in 2017.

[ Check your credit history: It’s easy to do and you can amend any mistakes ]

Instead of providing a numerical score, the CCR supplies a report of loans made to a consumer from a financial institution of more than €500, including credit cards, personal loans, PCPs, overdrafts and mortgages.

Think of it more as an information service that prospective lenders use to look at previous loans taken out and how they have been repaid before making a decision to approve a person for future loan.

The register also serves consumers by providing free access to information used by banks to determine future loan suitability.

It takes about 10 minutes to apply online on the Central Bank’s website using either a passport or driving licence plus a proof of address and your PPS number.

That way, if any nasty surprises are lurking, including potentially a record that you think is a mistake, you can immediately take steps towards remedying the situation.

Just because something is written on your credit register doesn’t mean it is set in stone, preventing future loans for life, says Michelle O’Hara, national spokeswoman for Money Advice and Budgeting Service.

“Under the Credit Reporting Act, 2013, you can request to have information on your record amended if you believe it is incorrect,” she says.

O’Hara says the first step is to get a copy of your current credit report because you can have two types of incorrect information – personal and credit.

“If your personal information is incorrect, the best advice is to contact your lender first to have this information corrected. An example of incorrect credit information might be that there is an incorrect balance stated or an incorrect number of payments on your loan.”

As your credit report provides the history of your missed repayments, it equally will provide details of steps you have taken in order to repay your debts. The key advice is to engage with your lender in order to commence the process of dealing with your debt

—  Michelle O’Hara, national spokeswoman for the Money Advice and Budgeting Service

An amendment can then be requested via online application on centralcreditregister.ie with emailed and posted forms also accepted.

“You must provide proof of your identity as outlined on the website, together with evidence which supports your request,’ she says. “The CCR will respond within 20-40 days of you making a valid request.”

If that doesn’t work and the CCR decides not to amend your record, you still have options, such as placing an explanatory statement on your credit report, going through the internal complaints procedure and contacting the Financial Services and Pensions Ombudsman.

An explanatory statement allows consumers to detail in 200 words or fewer, the circumstances that may have led up to them missing a loan repayment. For example, having a serious illness or experiencing domestic violence at the time.

Lenders can then see contributing factors to late or missing repayments when they make their decisions.

Although the credit register may seem daunting to those who experienced financial hardship in the past, it might also serve as a tool to rehabilitate your credit history, as O’Hara explains.

“As your credit report provides the history of your missed repayments, it equally will provide details of steps you have taken in order to repay your debts,” she says. “The key advice is to engage with your lender in order to commence the process of dealing with your debt.”

[ Customer complaints: Who can I go to for help when at the end of my tether? ]

Dealing with lenders may feel intimidating, which is why Mabs encourages consumers to contact it as they can engage with a financial institution on your behalf.

Help can be found at more than 60 Mabs locations across Ireland or on the national hotline at 0818-072000, Monday to Friday, 9am-8pm.

If a red flag on your record cannot be amended or explained to a satisfactory level, there is still reason to have hope. Loan details drop off the register five years after the last loan payment was made. For example, if a credit card bill for €5,000 was racked up in 2018 but the last payment on it was made in 2020, the record would be kept until 2025.

The best way to achieve a credit register report that looks good to lenders is maintain it from the start, bypassing the need to clear it up later.

The two rules O’Hara offers are simple and revolve around reading the fine print: “Before you take out any loan/credit agreement, ensure you are fully aware of its terms and conditions and in particular that it is a suitable product for you and that you will be able to meet the repayments. And ensuring that your repayments are made in line with any requirements of a loan/credit agreement is essential.”

This can mean small things such as making sure direct debits align with pay-day and longer-term planning such as making sure you can meet increased payments if interest rates rise further.

Borrowers looking for further assistance on how to clean up their credit can contact Mabs for free advice from the publicly funded service or can reach out to a financial adviser of their choosing.