Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the adequacy of the length of time Credit Reference Agencies retain information on defaults; and what assessment she has made of the potential merits of limiting that length of time, including to support people seeking to recover their financial standing.

Credit files play an important role in supporting informed and responsible lending decisions. They should contain factual information, including records of defaults, which typically form a key part of lenders’ assessments of creditworthiness. Organisations that report such information to credit reference agencies are expected to follow the Principles for the Reporting of Arrears, Arrangements and Defaults at Credit Reference Agencies, available at: https://www.scoronline.co.uk/wp-content/uploads/2021/05/Principles-for-the-Reporting-of-Arrears-Arrangements-and-Defaults-at-Credit-Reference-Agencies-version-2a-final-updated-to-refer-to-GDPR-and-DPA-2018.pdf.

Information on defaults is generally retained on a credit file for six years before being removed automatically. This reflects long-standing industry practice within the wider regulatory and data protection framework and the importance of this information to lenders’ assessments of creditworthiness. However, lenders do not all assess applications in the same way and an individual’s financial circumstances may be considered more broadly than credit file information alone.