Credit reference agencies

Definition 

Credit reference agencies are companies that check and monitor consumers financial records. They have been given approval by the government regulator, the Financial Conduct Authority (FCA) in the UK, and are allowed to examine consumer’s histories to build a record that can be checked by finance providers to assess a consumer’s risk as a customer.

Every time you apply for a finance package, you will sign an agreement allowing the finance provider to check your credit history with a credit reference agency.

What information do credit reference agencies store?

Credit reference agencies store information on a consumer’s finance applications (including how often), any missed payments or defaults on a finance agreement in the consumer’s past, and any bankruptcies or county court judgements (CCJs) that the consumer has in their financial history.

As well as these financial details, they also keep a record of your address history and the details you have submitted to the electoral roll. Many of these records are public and are collected together by the credit reference agencies to speed up the finance application process.

Who are the credit reference agencies?

There are many different credit reference agencies on the market. Some of the most popular are Experian, Equifax, Clearscore and Check My File.

Do all credit reference agencies have the same score?

When you apply to check your credit score with a credit reference agency, you are likely to be given a number of some sort that you can associate with a scale. The different credit reference agencies often work to their own scoring system, meaning you are unlikely to get the same score from different agencies. But most credit reference agency scores can translate to one of five credit ratings – excellent, good, fair, poor, bad. You should be able to work out what credit rating you have from the score you are provided.

Should I pay for a check from a credit reference agency?

In the past, you used to have to pay a credit reference agency to see what your credit score is currently recorded as. But recently, most agencies will provide you with the information for free. In exchange, you will probably have to agree to their terms and conditions which means they can share your details with finance providers for marketing purposes.

What if there’s a mistake on my credit file?

Sometimes you can find that an erroneous missed payment or issue has been recorded on your file. This can be frustrating when you are applying for a finance package and discover that you have a worse credit rating than you actually should have.

Before you apply for a finance agreement, you should always check your credit file through a credit reference agency. That way you can see if it is accurate and up to date, ensuring that when you do apply, you will get an accurate quote.

If there is an error, you will need to contact the credit reference agency and flag the error to them. They should then check their records and find a way to remove the error from your file.