Israelis Can Erase Credit Data, But With Caveats

Under Israeli law, individuals can request that their credit data cease being collected and that existing information be deleted from the Credit Data Repository managed by the Bank of Israel. This right, established by Section 22 of the Credit Data Law, applies to all adults, including self-employed individuals. However, a significant exception prevents those with clear evidence of non-payment from making such a request for three years from the date the negative data was transferred to the repository, not from when the debt was settled. This means the option is primarily available to those with a clean credit history.

When a request for deletion is approved, all credit data associated with the individual, including positive information like a fully paid mortgage or loan, is erased. This leaves the individual with a blank credit report. Lenders may then view this as an unassessable risk, potentially leading to loan denials or higher interest rates, as credit bureaus typically assess risk based on the last three years of data. Individuals planning significant credit applications are advised to re-enter the repository several months in advance to allow their credit score to be re-established.

An alternative, outlined in Section 30, allows individuals to remain in the repository but block their data from being shared with specific lenders, a group of lenders, or all lenders. This request is also submitted to the Bank of Israel and allows individuals to address issues with a particular lender without sacrificing their positive credit history with others.

Credit data is retained by the Bank of Israel for ten years. However, it is only shared with credit bureaus and lenders during the first three years. After this period, the data is kept for archival purposes only, and identifying details are eventually deleted. The article notes that a four-year-old delinquency would have already fallen out of the three-year window that impacts credit scoring, suggesting that waiting might achieve a similar outcome to deletion without negatively affecting other aspects of the credit report.

Incorrect data, such as a closed loan appearing as open or a closed enforcement file, is handled through a separate correction process. This involves providing evidence to the data source and is typically resolved within 14 business days, or up to 21 for complex cases. This correction route is described as less expensive than a full deletion. The article also mentions that privacy concerns have been raised since the repository opened in 2019, with dozens of entities gaining access to the information. The law restricts data usage to the purpose for which it was requested and prohibits requesting credit data for another person's employment. Individuals are entitled to one free consolidated data report annually, which details any problematic entries and the number of entities that have accessed their information in the past year.