Credit Report definitive guide.

Your credit report can reveal very personal information about your financial circumstances. Most commonly it is used by lenders to determine whether you are a reliable borrower. However, credit reports are also being used for another purpose. Officials are looking at people’s reports to see whether they are committing benefit fraud.

Local authorities currently use credit reports to ensure that benefit claimants are receiving the right payments. However, in many cases now officials can see whether benefit fraud is being carried out. One example is for those who claim a discount on their council tax for living alone. Most people who claim this type of benefit are actually living on their own. However, there are others who aren’t and they are being found out through the information found on their reports.

Creditors will store information on applications that are made for a loan or credit card for bad credit, as well as bank account information. There are many people who have savings accounts that the government do not know about. These can be accessed through credit reference agencies.

There is also the more serious problem of identity theft. Many fraudsters have been caught after running various different names through the same address. This shows up on credit reports.

The three credit reference agencies, Equifax, CallCredit and Experian are all keen to ensure that consumer privacy is still protected. In order to do this they have ensured that authorities need to have a good reason why they need to see the reports. Although there has been some criticism over whether some credit reference agencies are releasing credit reports when they don’t really need to as it helps with their commission. This has been strongly denied by the companies.

There are some experts who are claiming that credit reports cannot be used to accurately catch benefit fraud. There can be mistakes in people’s reports for example. Consumers are constantly urged to check their reports to see that everything is correct. If there are any mistakes then it can have a serious negative effect on their future finances. Even the credit reports that are true have a lot of incomplete reports. If you take a look at your credit report from all three of the main credit reference agencies, you are bound to see that they are all different. Therefore innocent people could potentially get wrongly accused of benefit fraud if this system is used.

The welfare minister, Chris Grayling, has defended the plans to use credit rating agencies in this way. Grayling had an interview with Radio 4’s Today Program where he also defended the bounties that are being offered to companies. The government is basically paying credit reference agencies to help them to detect benefit fraud.

In an article that was released to the Manchester Evening News, David Cameron states that he wants the approach to be extended:

“Tougher penalties for fraud, more prosecutions, encouraging those who know fraud is taking place to come forward, and making greater efforts to reclaim money that’s wrongly paid. We will look at these things and more. Including for example, using more information from third parties such as credit reference agencies to identify circumstances that are incompatible with the benefit claim.”