Credit agencies can't use family data

CONSUMERS applying for credit will no longer by hindered by financially wayward relatives living under the same roof from November 1.

Credit reference agencies are being forced to remove all third party financial data from reports requested by lenders unless the third party has a financial relationship with the applicant.

In the past, lenders have been able to take into account family members or friends living in the same household when deciding whether to lend to an applicant, leading to situations where financially secure individuals have been denied credit because of debt-laden associates.

The change follows four years of consultation between the credit industry and Government body, the Information Commissioner's Office.

ICO working party chairman George Wilkinson said: 'We believe the changes in the use of third party data will be significant in the industry‘s initiatives to ensure lending is conducted responsibly and fairly – particularly important when there is so much concern over consumer indebtedness.'

Despite the November 1 deadline, the ICO said it will give credit reference companies until Christmas to remove the relevant information from reports before it starts clamping down.

Leading credit agencies Equifax and Experian confirmed they will remove the information from November 1.

Experian director of consumer affairs Jill Stevens said: 'Although seeing this information helped lenders avoid granting credit into over-committed households, it was almost universally agreed to be a step too far in terms of privacy.'