Credit Reference Agencies are a bit of a mystery to many of us. Who are they? What do they do? Do they decide whether my applications for credit get approved or declined?
There are three main Credit Reference Agencies in the UK – Experian, CallCredit, and Equifax. Their role is to each collect the information that makes up your credit report, and store it securely. This information can then be accessed by you, if you want it, and by lenders that you apply for loans with.
What do credit reference agencies do?
When you apply for a loan, the lender will consult with at least one of the Credit Reference Agencies named above to check the information they hold. They’ll use it, combined with the information you provide during the application, to decide whether or not to lend to you. It’s commonly thought that when the Credit Reference Agencies provide information to lenders, they also make the decision on whether or not your application should be approved. This isn’t true – all they provide are the details requested, no opinions on your creditworthiness.
There are a couple of ways you can access the information held in your credit report. You can request a copy of your statutory credit report from one of the Credit Reference Agencies for a small fee. This provides a copy of the information lenders see if you apply to them. Alternatively, you can subscribe to a more in-depth credit reporting service to get ongoing access to your information. A subscription to a credit reporting service gives on-demand access to your credit report. It also shows your credit score to give you an impression of how lenders might view you, and sometimes hints and tips to help you improve your likelihood of approval. The Credit Reference Agencies all provide this for a fee. There are a number of both paid for and free third party services available too.
So that’s it. In a nutshell, Credit Reference Agencies are a source of information both for you, and for lenders that you apply to. But how can you better understand what information they have, and how it’s affecting your ability to get a loan? Get more tips on cracking credit from our Money Savvy articles.
