Understanding Credit Reference Agencies Used by Lenders

When you apply for credit in the UK, lenders look at your financial trustworthiness by checking your credit history. Credit reference agencies (CRAs) help with this. They collect and keep track of detailed records of people’s credit use. It is important to know what these agencies do, what data they gather, and how lenders use this information. This knowledge is key for managing your financial health.

What Are Credit Reference Agencies?

Credit reference agencies are groups that collect and keep track of information about how people use credit. They get details from different places to build complete credit files. Lenders use these files to check if someone is likely to pay back what they borrow. In the UK, the main CRAs are Experian, Equifax, and TransUnion.

How Do Credit Reference Agencies Collect Information?

CRAs get information from different places to create your credit file.

• Credit Agreements: This includes details of loans, credit cards, mortgages, and other credit products. It shows payment history and how much you still owe.
• Public Records: This holds information from public records. It covers things like electoral roll data, court judgments, bankruptcies, and individual voluntary arrangements (IVAs).
• Financial Behavior: These are records of how you handle money. This includes on-time payments, missed payments, and any fraudulent activity related to your accounts.
• Fraud Prevention Services: Crediting Reference Agencies (CRAs) team up with fraud prevention service groups to track cases of fraud and identity theft.
• Registry Trust and Local Authorities: They gather extra data from sources like the Registry Trust, which manages court judgment records, and updates from local authorities on the electoral register.
• Bank Accounts: Some CRAs also include information about open and closed bank accounts. This helps lenders understand your financial behavior.
• Credit Brokers: Information from credit brokers that help with loans and financing agreements is usually kept in credit reference files.

What Information Is Included in Your Credit File?

Your credit file has different details that help lenders evaluate if you are a good risk for borrowing money.

• Personal Information: Your name, date of birth, and address history.
• Credit Accounts: Details about your current and past credit accounts, which include credit cards, loans, and mortgages.
• Payment History: A record of payments made on your credit accounts, showing any late or missed payments.
• Public Records: Information about any court judgments, bankruptcies, or debt relief orders.
• Electoral Roll Information: A check on your registration on the electoral roll to help verify your identity.
• Financial Conduct Authority (FCA) Oversight: Credit Reference Agencies (CRAs) must follow FCA rules. This helps ensure fair credit reporting and keeps data secure.
• Victim of Fraud Alerts: If you have been a victim of fraud, a notice can be put on your credit reference file to notify lenders.

Money Guides

Helping You Borrow Money at the Right Price

Compare Now

How Do Lenders Use Information from Credit Reference Agencies?

Lenders look at the information from Credit Rating Agencies (CRAs) to decide how risky it is to lend money to someone. This evaluation includes:

• Credit Scoring: This is giving a score to show how reliable you are with credit based on your credit history.
• Risk Assessment: This checks how likely you are to pay back the borrowed money on time.
• Decision Making: This means deciding if your credit application should be approved or denied. It also includes deciding the terms of the credit agreement, like interest rates and credit limits.
• Types of Credit Evaluated: Lenders look at various types of credit applications. These include personal loans, mortgages, and credit cards and they base their decisions on CRA reports.

How Can You Access Your Credit Report?

Under the Data Protection Act 2018, you can get your credit report from any CRA. This is known as a statutory credit report and you can get it for free. Checking your credit report regularly helps to make sure the info is correct. It also helps you spot any signs of identity theft or fraudulent activity.

What Should You Do If You Find Errors in Your Credit Report?

If you find mistakes in your credit report:

1. Contact the CRA: Let the CRA know about the mistake. Be sure to share proof to support your claim.
2. Notify the Lender: Call the lender with the wrong information. Tell them to fix the error.
3. Add a Notice of Correction: If needed, add a 200-word statement to your credit file. This will explain what happened.
4. Seek Further Help: If the problem is still there, reach out to the Financial Ombudsman Service for help.

How Do Credit Reference Agencies Impact Your Credit Score?

CRAs give the data needed to calculate credit scores. However, they do not create a single credit score that everyone uses. Each lender has their own way of scoring and different standards. It is important to keep a good credit history and ensure your credit file has the latest information. Doing this can lead to a better credit score. A better score can help you get credit on better terms.

How Can You Improve Your Credit Profile?

To enhance your credit profile:

• Register on the Electoral Roll: This helps prove who you are and where you live.
• Make Timely Payments: Always pay your bills on time. This shows you are reliable.
• Manage Credit Utilisation: Keep your credit card balances low compared to your limits.
• Limit Credit Applications: Do not apply for too much credit at once. This can make people think you are in trouble financially.
• Use Optional Tools: Many CRAs provide optional tools like credit score simulators and financial advice. These can help you boost your credit score.
• Monitor Your Online Experience: Some CRAs look at how you interact with online marketing pages. This can affect how they see your financial situation.

Comparison of Main Credit Reference Agencies

Correct as of 06 March 2025

FAQs About Credit Reference Agencies