Credit Reference Agencies
What they are, who they are and what they do.....and don't do.
Here's the main two:
The information gathered, kept and shared by credit references controls much of your financial status.
First of all Credit Reference Agencies do NOT have a blacklist.
Secondly a Credit Reference Agency cannot turn you down for a loan, mortgage or credit card. They have no decision making ability over such matters.
At it's most basic, a credit reference agency just gathers data in order to produce information for it's subscribing members like banks and other lenders.
So what does a credit reference agency do?
They gather, keep and share information about you and your finances.
Where does a credit reference agency get their information from?
From public registers such as the electoral roll and a list of CCJ's (County Court Judgements) and bankruptcies amongst others.
It also is given information by contributing members who are financial organisations such as HSBC.
Why does a credit reference agency exist?
This information is shared amongst their contributing members to ensure:
- They are lending the money to the correct person
- The person is likely to be able to meet the repayments*
This information is shared amongst their contributing members so that:
- They can lend responsibly
- They can offer products based on their analysis of the risk of that person defaulting on payments
How are lending decisions made?
The information sent to lenders is put through a process that scores it. This score is used to determine if to lend to the customer and what level of financial risk they might be.
Every lender has their own scoring system. Lenders are not obliged to lend money even if the score is very good. It might be that they want to lend to someone with a less than perfect history so that they can justify a higher rate of interest.
At the end of the day, lenders only have a certain amount of money available for borrowing and they have shareholders that expect profits.
What is sub-prime lending?
Sub prime lending is a classification where people with an imparied credit record can obtain loans but at a higher rate of interest. This is highly profitable but also potentially riskier.
Can I see my credit file?
Yes, you are encouraged to do so to ensure the information held on the systems is correct.
Why would information be incorrect on my credit file?
Although clerical mistakes are very rare there are increasing occassions where criminals try to obtain credit using someone elses identity. This is identity fraud and sometimes huge debts can be run up in you name and the first you will know about it is when you apply for credit yourself and get rejected, or an unexpected court summons appears through the door for a debt you had nothing to do with.
Credit reference agencies encourage you to subscribe to your credit file to ensure the data is correct. It might not be what you want to see but it should be correct.
Can I correct the information on my credit file?
No. Only the lender can issues a notice of correction to remove incorrect or alter the data.
How long is the information held for?
Financial history is held by credit reference agencies for 6 years
How can I find out more?
There are 3 main credit reference agencies in the UK
Obtaining your credit file is easy. You can either do it online or by post. By post costs £2 but online costs more, however there is a loophole that means you can obtain your files for free online by registering for the trial online services these firms offer and then cancelling before the trial expires.
Experian's online service is called CreditExpert : Choose the 30 day free trial, get your file and then send a cancellation email to customerservice@creditexpert.co.uk .
Equifax's online service is called Credit Watch Gold : Choose the 30 day free trial, get your file and then request cancellation by calling 0870 0100583 and quote your account reference.
Call Credit's service is MyCallCredit and you need to look for the Ealert product which is a 30 day free trial. Cancel this by sending an email to care@mycallcredit.com.
Which lenders use which agency
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