Credit rating and handling of personal data

Credit rating is a process used to assess how likely an individual is to be able to meet a loan agreement or commitments.

Credit rating

Creditors may be obliged by law or company lending regulations to assess the creditworthiness of the person who requests a credit facility. It may be necessary, in order to conduct a reliable credit assessment, to use information from a financial information office, such as Creditinfo Lánstrausti hf. Creditinfo Lánstraust hf.

Credit report

Creditinfo uses information from its database to produce a report on the creditworthiness of individuals and legal entities. Such a report contains the conclusion of the calculation of Creditinfo’s likelihood of whether a party will fulfill a loan agreement. The conclusion is often used by lenders to decide whether and on what terms they grant a loan.

What information is used in the credit report?

The credit report should be based on reliable information that is of critical importance and provides reliable indications of the probability of the person meeting the credit agreement.

A financial information institution may only obtain and process information for the purpose of preparing a credit report from its official data and records and only to the extent necessary for the conduct of a reliable assessment.

The Financial Information Office may also work with other information, such as on the debt status of the person concerned in order to carry out a reliable assessment, but consent in the sense of the Data Protection Act must be available beforehand.

When can credit ratings be carried out?

Credit ratings are usually carried out when a person applies for a loan, opens an account or assumes other financial obligations. Companies need to have a legitimate reason and a clear purpose for obtaining access to personal data for credit ratings. A request must also be made for such ratings.

Individuals and legal entities can also request the financial information office to prepare a report on their creditworthiness, without a third party request.

Rights of individuals and legal entities

• Education: Before the financial information office prepares and disseminates a report on your credit rating, it is supposed to inform you of the information and variables that will be used in the report.

• Access to information: Individuals and legal entities have the right to receive information, including which personal data are used to calculate their credit rating and how they are obtained, the weight of individual variables when calculating the probability of a credit report and the underlying rationale.

• Correction and deletion: If incorrect or unreliable information is used in the credit rating, individuals and legal entities have the right to have it corrected or deleted.

• Restrictions on processing: Individuals and legal entities may also request that the processing of personal data for the purpose of calculating their credit rating be restricted if it is unnecessary or no longer necessary.