Introduction
- The Approach to this and all Articles is consistent with our Standard System and Procedure.
- This article gives you a guide and overview to Credit and Credit Rating Agencies.
What do Lenders require?
- Before giving anyone credit, lenders such as banks, credit card providers and loan companies need confidence that the amount being lent can be repaid.
- This is essentially an affordability test.
- To help them do this, they will use third party companies known as Credit Rating Agencies.
What are Credit Reference Agencies?
- Credit reference agencies (CRAs) give lenders a range of information about potential borrowers.
- Lenders use this information to make decisions about whether they will offer you credit or not.
- They hold certain information about most adults in the UK.
- The three main consumer CRAs in the UK are Equifax, Experian and TransUnion.
- CRAs are licensed by the Financial Conduct Authority.
What information do they hold?
- Most of the information held by the CRAs relates to how you have maintained your credit and service/utility accounts.
- Details of your previous addresses and information from public sources such as:
- the electoral roll.
- public records including county court judgments.
- bankruptcy and insolvency data.
What can they do with this information?
- The information held by the CRAs is also used to verify the:
- identity
- age
- residency of individuals,
- to identify and track fraud,
- to combat money laundering
- to help recover payment of debts.
- Government bodies may also access this credit data to check that individuals are entitled to certain benefits and to recover unpaid taxes and similar debts.
Refused credit, what should I do?
- You can ask the lender to explain the main reason why and review their decision.
- Even if the lender reviews their decision, they may still turn you down.
- You can request a copy of the information about your financial standing on your credit reference file from any of the three main CRAs in the UK.
Improving your Credit Score
- This will vastly increase your chances of being approved for credit.
- All information on your credit file should be accurate and up to date and you should first ensure that this is done.
- Tips to Improve your Credit Score