Two in three people who checked their credit report after suffering an IT glitch from their bank discovered mistakes on their record, according to a new survey by ClearScore – a financial technology business that gives UK customers free access to their credit score and report.
The worrying statistics have emerged just weeks after we exclusively revealed that every day at least one UK bank suffers a major IT outage.
Mistakes on your credit history could bring down your credit score, and may affect your ability to qualify for a mortgage, loan or new mobile phone contract.
Here, we look at the findings from ClearScore and explains how you can rectify mistakes on your credit history.
Credit score errors follow IT meltdowns
ClearScore carried out a survey of 2,000 people whose bank had suffered an IT glitch. It found that, among people who had checked their credit score after the outage, 67% found an error in their credit history.
Worryingly, however, many more mistakes may be going under the radar. Only a quarter of those who heard about a major IT outage at their bank checked their credit reports for potential mistakes afterwards. And nearly a third have never checked their credit report at all.
When your bank’s IT system goes down, transactions may not go through as expected, potentially leading to defaults if you miss the payment deadline. You may also struggle to gain access to your accounts, so that you can’t pay bills on time.
In some cases, missing a payment could mean you incur a late fee. This could have a snowball effect, by pushing you over your credit limit or into your overdraft, further damaging your credit score.
Often, banks won’t report data to credit agencies during major IT crises. However, while this may protect you from defaults, it also means any actions you take to improve your score – such as paying bills on time – could be lost.
We explain your rights in our guide to online banking and app IT outages.
How common are banking failures?
Since April 2018, the Financial Conduct Authority (FCA) has required banks to report any major operational or security incidents, such as IT failures, which could affect payments being processed.
We exclusively revealed that 302 reports were made between 1 April 2018 and the end of the year by 30 of the major banks and building societies – an average of one incident a day.
TSB, which suffered an IT meltdown causing 1.9 million people to lose access to online banking services over several weeks, reported 16 incidents.
You can see the full data in the table below.
Note that figures relating to banks within the same group cannot be added together to form a total because a single incident may have affected multiple brands within the group.
How can you rectify credit score mistakes?
Your credit history is used by lenders to decide whether or not to approve you for a loan. Your credit score could also influence whether you’re granted a mobile phone contract, or even whether you’re able to rent a property.
Mistakes can bring down your score, and potentially disqualify you from the best interest rates. Some high street lenders may not approve your application at all, meaning you’ll need to use a specialist lender, which often charge much higher interest.
There are three major credit reference agencies – Experian, Equifax and TransUnion (formerly CallCredit) – all of which allow you to check your report for free. You should check the information on all three reports is accurate, especially:
Are your personal details, like address information, up to date?
Have your bank or any lenders supplied the correct information about payments?
Are all the credit applications recorded in your name accurate?
You should keep an eye open for potentially fraudulent activity, including fake credit applications, as scammers often take advantage of IT glitches.
If you spot a mistake, contact the credit reference agency to correct the record. The agency has 28 days from your request to inform you if it has removed the entry, amended it, or taken no action.
In the meantime, the entry will be marked as ‘disputed’, so any lender looking at your file will be made aware that you don’t agree with it.
If the credit reference agency doesn’t amend your records, you can add what’s known as a ‘notice of correction’ – up to 200 words – to your file. This is your chance to highlight any mitigating circumstances (a bereavement, for example) or your belief that the information on your report is wrong.
And should you be unhappy with the credit reference agency’s response, you can contact the Information Commissioner’s Office (ICO) to make a complaint.
Read more: Credit reports – all you need to know
Which? Freedom to Pay campaign
IT glitches highlight the importance of cash as an alternative to online and digital banking – but we are concerned that cash is disappearing from our streets.
We launched our Freedom to Pay campaign to call on the government to appoint a regulator to protect cash as a payment option.
Meanwhile, all of us rely on cash as an alternative when online banking goes down.
Editor of Which? Money, Jenny Ross, says: ‘Our research shows that these major banking glitches, which can cause huge stress and inconvenience to those affected, are even more common than we feared.
‘This highlights why it is so important that a regulator is given responsibility to protect cash and other non-digital payments as a back-up when technology fails.’