Changes to the Data Protection Act that came into force on 1 March will have implications for the way lenders do business and will increase the rights of mortgage applicants.
Under the new Act, consumers will have the right not to have significant decisions, such as credit scoring, based solely on the results of automatic processing.
Jill Stevens, director of consumer relations at credit referencing agency Experian, said the Act is now much more focused towards consumers.
She said: “The Act places more emphasis on consumer consent. Any company offering credit will have to make sure the consumer is told how any information is used and must be given the opportunity to refuse or withhold consent.”
Rob McIvor, corporate public relations manager at Woolwich, said the new legislation was in line with current practice.
He said: “Applicants are told straight away that they will be automatically credit-scored and they have the chance to reject this at outset. If they do not like the result, they can then be credit-scored manually.”
Experian actively encourages individuals to check the details that are held with credit referencing agencies, particularly when problems arise.
“If there is a dispute over the information held by an agency, the lender and the agency must ensure the detail is flagged as disputed until it is resolved. This means that if credit referencing comes across a flag the applicant cannot be put through the system automatically, it must referred out and underwritten manually.”