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.
