Insolvency, Credit Recording and Credit Repair

I set out below the text of an update given to various stakeholders by the Insolvency Service of Ireland today:

The ISI has been contacted in recent months by a number of individuals enquiring about credit rating, recording and repair post-insolvency solution.

Returning to solvency should not to be confused with a return to credit worthiness, which is determined by each financial institution using its own criteria. A debtor can seek credit from a financial institution post-insolvency. However, since insolvency has an adverse effect on a debtor’s credit rating this may be taken into account by a financial institution from whom credit is sought by a previously insolvent person.

Credit rating information is held by the Irish Credit Bureau (ICB). This is compiled from periodic loan reports submitted to them by financial institutions. Missed payments and events such as loan write-offs, loan restructures and insolvency will be reported to the ICB and may affect credit rating. The ICB holds information about borrowers and their loans for 5 years after a credit agreement is closed. The ICB cannot change a credit report unless a financial institution requests it to do so. The ISI understands financial institutions have procedures in place to ensure this happens.

By law, a financial institution must ensure that information it holds or gives to a third party about a customer/debtor is correct and up to date. A customer/debtor has the right to insist that a financial institution correct any incorrect information about that person. Lenders should act immediately on a written request to correct any mistake and amend a debtor/customer’s credit report. However, if a debtor experiences problems or delays, or if a lender fails to put things right, the debtor can consider making a complaint and referring the matter to the Office of the Data Protection Commissioner.

The ISI notes the practice in other jurisdictions whereby an insolvent debtor who proactively seeks to address their financial issues through a statutory process sees their credit rating repair over time and generally regains access to credit.

My comment
Whilst the update contains nothing "new", it is a useful summary of the issues involved.

Jim Stafford

So Jim is my understanding to be from your above thread that even though you are a discharged bankrupt with secured and unsecured debt gone (at a price I might add, not off scott free in case other posters may think so) that a lending agency in checking your credit report will turn you down even though you have no debt going forward.

Thanks

As ISI suggest, "credit worthiness is determined by each financial institution".

A financial institution might have concerns that if a borrower went bankrupt before, that they might find it easier to go bankrupt a second time.

Financial institutions in different countries can have a different cultural approach to dealing with bankrupts. For example, American financial institutions would be more forgiving than an Irish financial institution.

The phenomenon of personal bankruptcy is relatively new in this country, and it is too early to tell how long it will take bankrupts to "repair" their credit worthiness. I would say at least 3 - 5 years.

Jim Stafford