The Credit Reporting Act 2013 was enacted on the 23rd December 2013 and came in to force on 27th January 2014. The Act provides for the establishment and operation of a statutory Central Credit Register (CCR). This is a database of credit applications and credit agreements which will help lending institutions to make informed lending decisions and to protect borrowers from excessive debt. The system will require mandatory credit reporting and credit checking and it will be regulated by the Central Bank of Ireland. The function of the Register (once operational) is to promote responsible lending and borrowing and provide an important support to the Irish banking industry. Lenders will have access to the current level of indebtedness of a borrower to enable them to assess their creditworthiness and make an informed decision in terms of lending. This information is gathered from lenders who will be required to report a comprehensive range of credit information.
Some key elements of the Act are as follows;
1. The Act prescribes the following categories of information that can be held on the CCR; personal information, credit information, details connecting borrowers and guarantors, credit scores and other analyses produced by the bank. The Act also specifies how long the information can be retained on the Register.
2. Lenders must report a comprehensive range of credit information and personal information about loan applications and loan agreements that involve more than €500.
3. Lenders are required to complete mandatory credit checks with the CCR before approving credit applications of over €2,000.
4. Lenders may apply to check the register in other specified situations (outlined in the Act) not involving a credit application of over €2,000. Consumers can also apply to access their own credit records.
5. The information accessed on the register can only be used by the lender for the following specified purposes:
- Verifying information provided in connection with a credit application.
- Evaluating the risk of lending to a borrower, accepting a guarantee from someone or accepting changes to the nature or term of a credit agreement or guarantee.
- Monitoring defaults in obligations under credit agreements or guarantees.
- Evaluating whether to make any debt proposals or arrangements where a request for such an evaluation has been made by the borrower.
- Analysing the nature of the lender’s portfolio of credit agreements.
6. There is an obligation on the lender to ensure that borrowers/guarantors are aware of their rights and duties under the Act. The forms for making a credit application will include a notice stating that the Act requires certain information to be provided in relation to credit applications and credit agreements for entry on the Register.
7. The Central Bank may, with the consent of the Minister for Finance, make regulations prescribing a levy to be paid by lenders for the purpose of meeting expenses properly incurred by the Central Bank in performing its functions under the Act and maintaining the CCR. The Central Bank may also make regulations prescribing fees to be charged for access to information on the CCR. However, consumers are entitled to a free copy of their own record on the Register once a year.
It remains to be seen when the Central Credit Register will be operational. In the interim, lenders are likely to continue to use privately operated credit checking bureaux which provide information to members only.