Compensation for Incorrect Credit Report Entries: What You Can Actually Claim

An incorrect credit-file entry can cause more than a lower consumer score. It can contribute to declined borrowing, a higher interest rate, extra work correcting the record and significant distress.

But there is no automatic compensation amount simply because a credit report contained an error.

The outcome depends on what went wrong, who was responsible, whether the mistake caused a real impact and what evidence proves that impact.

Where a regulated financial business has reported incorrect information, possible redress can include:

• correcting the credit file;
• refunding or reimbursing proven financial loss;
• compensation for distress or inconvenience; and
• other steps needed to put you back in the position you would probably have been in if the error had not happened.

The Financial Ombudsman Service says it can tell a business to amend a credit file and pay compensation where appropriate.

If the issue is a data-protection breach, the ICO can investigate and give a view, but the ICO cannot itself award compensation. Data-protection compensation can be agreed with the organisation or, where necessary, claimed through court.

If the data is wrong, get the underlying entry corrected.

Examples include:

• a default recorded against the wrong person;
• a payment marked late when it was on time;
• an incorrect balance;
• a duplicate account;
• a wrong default date;
• an account showing as open after closure; or
• an inaccurate address or financial association.

Our credit report errors guide explains who to contact for each type.

Compensation without correction would leave the underlying problem unresolved.

It depends on the data.

For lender-supplied account information, the Financial Ombudsman Service says it will normally look at the complaint against the lender that recorded the information, rather than the credit reference agency.

There can still be cases where the CRA itself is responsible, especially for information or processing within its own control.

The ICO similarly explains that responsibility depends on the source of the inaccurate information.

Identify:

1. what is wrong;
2. who supplied or created it; and
3. who had the ability to correct it.

The Ombudsman's general approach is to try to put the consumer back in the position they would have been in if the business had not made the mistake.

That can involve:

Correction of the credit file

The business can be required to remove or amend inaccurate information.

Direct financial loss

If the error caused a measurable financial loss, the Ombudsman can require reimbursement.

Examples could include:

• extra interest paid;
• an avoidable fee;
• costs directly caused by the error; or
• another quantifiable loss with a clear causal link.

Distress and inconvenience

The Ombudsman can also award compensation for the practical and emotional impact of a business's mistake.

Its current guidance says this can include:

• distress;
• inconvenience;
• pain and suffering; and
• damage to reputation.

The amount depends on the circumstances. There is no single tariff for "wrong credit file entry".

This is where evidence becomes crucial.

The Financial Ombudsman Service specifically says that a consumer may argue that inaccurate adverse information prevented them from getting credit elsewhere.

But the Ombudsman normally asks for evidence showing a clear link between:

1. the original lender's incorrect reporting; and
2. the later lender's refusal or more expensive offer.

That makes sense because lenders use many factors besides the credit-file entry.

Useful evidence can include:

• the declined application;
• a lender explanation;
• underwriting correspondence;
• a broker email identifying the adverse entry;
• a later approval after the error was corrected;
• rate differences between the failed and replacement borrowing; and
• evidence of fees or extra interest actually paid.

Simply saying "my credit score was lower, so I must have lost money" may not prove the loss.

That makes causation harder, but not necessarily impossible.

Collect the timeline:

• date the incorrect entry appeared;
• date you applied;
• lender searched which CRA;
• application outcome;
• date the entry was corrected;
• any later application result.

Ask the lender for the main reason for the decline where possible.

If a broker handled the application, ask what criteria issue prevented the case.

The stronger the evidence connecting the error to the financial outcome, the stronger the compensation argument.

Potentially.

The Ombudsman can consider distress and inconvenience caused by having to:

• repeatedly contact a lender;
• chase several CRAs;
• deal with an unjustified refusal;
• correct identity or fraud issues;
• produce repeated evidence;
• lose access to normal banking; or
• spend a prolonged period with inaccurate adverse data.

Not every inconvenience leads to a substantial award.

The Ombudsman looks at the seriousness, duration and actual impact of the problem rather than paying a fixed amount per phone call or month.

No automatic table applies to every credit-file error.

The Financial Ombudsman publishes general guidance and example ranges for distress and inconvenience, but decisions remain fact-specific.

Using an online forum figure from somebody else's case is therefore a poor way to value yours.

A serious error that directly caused a failed house purchase is different from a short-lived typo corrected quickly before it affected any decision.

The Information Commissioner's Office regulates data-protection compliance.

You can complain to the ICO about inaccurate personal data or mishandling of your correction rights.

The ICO can investigate and take regulatory action where appropriate.

But its current consumer guidance is explicit:

the ICO cannot award compensation.

An ICO outcome can still be useful evidence in a later dispute or claim.

Data-protection law can allow compensation where an organisation's infringement caused:

• material damage, such as financial loss; or
• non-material damage, such as distress.

The ICO says you can try to agree compensation with the organisation directly.

If it refuses, a court can decide whether compensation is payable and how much.

Court action carries risk, including possible costs consequences, so the ICO recommends taking independent legal advice before bringing a claim.

This guide is general information, not legal advice.

These routes are not interchangeable.

A financial-service reporting dispute will often start with the lender's formal complaints process and may then go to the Ombudsman.

A pure data-protection issue may also involve the ICO.

Create one evidence folder containing:

• copies of all three credit reports;
• screenshots showing the wrong entry;
• statements proving the correct position;
• complaint letters;
• final responses;
• CRA dispute results;
• application decline letters;
• broker emails;
• replacement borrowing terms;
• receipts or fee evidence;
• a timeline of calls and actions; and
• evidence of any direct financial loss.

Do not rely on the live credit report alone. Once corrected, the evidence of the old entry may disappear.

Keep the structure simple:

What was wrong?

Identify the exact entry and date.

Why was it wrong?

Attach evidence.

What happened because of it?

Explain the failed application, extra cost, stress or work required.

What do you want?

Ask for:

• correction;
• written confirmation;
• reimbursement of provable loss; and
• fair compensation for the wider impact where appropriate.

That gives the business something concrete to investigate.

You can still complain if it caused a real impact before correction.

But a promptly corrected error that caused no financial loss and little inconvenience is unlikely to justify the same redress as a serious problem that lasted months and caused failed borrowing.

Compensation is about consequences, not just the existence of a mistake.

Browse all our credit score guides.

• Financial Ombudsman Service — Compensation
• Financial Ombudsman Service — Financial difficulties and credit-file impact
• Financial Ombudsman Service — Distress and inconvenience compensation
• ICO — Credit
• ICO — Taking your case to court and claiming compensation

Related: Credit Report Errors | Dispute a Default | Dispute an Incorrect Late Payment.