Credit Reference Agencies (CRAs) are independent companies that store information about your Credit history. When it comes to getting a loan or credit card, lenders will look at your credit history. It is one of the most important factors in whether they decide to lend to you. That’s why it is worth understanding what CRAs do and how they impact your financial life. 

What is a Credit Reference Agency (CRA)?

A Credit Reference Agency is a business that collects financial information on people and businesses. It includes information on your financial activity, past and present, and it goes back 6 years. This information is then used by lenders to help them make decisions about whether to lend money or provide credit.

What do Credit Reference Agencies do?

CRAs collect information from a variety of sources, these include:

• Banks
• Credit card companies
• Loan companies
• Public records.

The information they collect is contained in your own unique credit report. Your credit report helps to identify you as well as providing information about your credit history. It shows how well you’ve maintained loan and credit accounts that you have, both past and present.

The CRAs also use this information to give you a credit score. This gives an overview of how creditworthy you are.

How many credit reference agencies are there in the UK?

In the UK, there are 3 major CRAs, these are:

• Experian
• Equifax
• TransUnion

When a business runs a credit check on you, they’ll use one of these 3 Credit Reference Agencies.

How does a Credit Reference Agency collect information?

Credit Reference Agencies collect their information from a few different sources. But every bit of information is based on an activity that you’ve carried out with a business. This would include accounts you’ve held with the following.

• Lenders
• Banks
• Landlords
• Utility and mobile phone companies

Whenever you make payments, the lender records them with at least one of the 3 CRAs. Any accounts you have with them are recorded on your credit file too.

If you are taken to court to have debts recovered, these are added to the Public Register. The CRAs will record this information on your credit file.

How do Credit Reference Agencies use this information?

CRAs use this information to create your credit report, and this generates your credit score. Credit scores are a numerical reflection of how credit worthy you are. They give you a guide on how lenders will view you when you apply for loans and lines of credit.

The higher your credit score, the more likely you are to be approved for credit.

What information is included in a credit report?

1. Your personal information

This would include:

• Your name
• Your date of birth
• Your current and previous addresses

2. Whether you’re on the electoral roll

Your credit report will confirm whether you’re registered to vote. It helps lenders verify your identity.

3. A list of all your credit accounts

This includes every type of credit account you have. It can be anything from your bank account to loans, mortgages or credit cards. Your credit report will show all the payments you make to these credit accounts too. And it’ll show if they were paid late or on time.

4. Public information

Public information is items that are reported on the public record. For example, these would include County Court Judgements (CCJs), repossessions and bankruptcies.

5. Details of people who you’re linked to financially

If you’ve taken out any joint borrowings or bank accounts with someone, they’ll be linked to you financially. This will show up on your credit report. It means that lenders may look at their credit report too when deciding whether to lend to you.

How can I get my free credit report?

There are two main ways to get a copy of your credit report:

1. Getting a credit report direct from the Credit Reference Agencies

You can get your credit report for free from each of the Credit Reference Agencies. You’ll need to register with them first and open an account with them, but you can cancel it whenever you want.

As lenders don’t all use the same CRA, you’ll have to look at what’s on your report with all three agencies. That’s the only way you’ll get an accurate picture of what’s being reported on you.

2. Getting a credit report from a credit monitoring service

There are credit monitoring services in the UK who’ll give you information on your credit report. These services include

• Clearscore
• Credit Karma
• Credit Club

These credit monitoring services will give you your credit score for free. They’ll also alert you if anything on your report changes.

Why is my credit score different with each of the Credit Reference Agencies?

There are two main reasons why your credit score might be different with each of the CRAs in the UK.

1. The scoring ranges that each CRA uses are slightly different

Each CRA has its own scoring range and your credit score with each of them might differ. The table below shows the different scoring ranges each CRA uses.

As you can see, a credit score of 700 would class your score as being poor with Experian. But it’s classed as good with Equifax, and excellent with TransUnion. That’s why you can’t expect to get the exact same credit score for all 3 CRAs.

2. The CRAs may have different information on your credit report

Each CRA gets their information from different sources. That’s because not all lenders report your lending activity to all 3 CRAs. It means that the information one agency uses to work out your credit score won’t be the same as another.

Remember, your credit score is not the only factor lenders use when assessing an application for credit. Your income, expenditure, employment history, and other factors will also be taken into account. So even if your score is different with each CRA, it’s just one part of the overall picture.

How can Credit Reference Agencies help you improve your credit score?

If you sign up to the CRAs monitoring services, they’ll be able to help you improve your credit score. They’ll do this by offering you the following services.

• They’ll give you tips on how to improve your credit score that are relevant to you and your credit file.
• They can give you daily updates to your credit score so you can see what’s having an effect on it.
• They’ll send you alerts if anything has happened that causes your credit score to change.
• They’ll give you a clear view of everything you owe, making it easier to see all your debts in one place.

By signing up to their services you will have to pay a monthly fee. But if you haven’t registered for this before you can sign up for a free 30 day trial. That way you can use it for a few weeks to see if it’s useful for you before you start paying for it.

What are the benefits of using a Credit Reference Agency in the UK?

CRAs help to provide accurate and up-to-date information about people’s credit histories. This helps lenders to make informed decisions about who to lend to. And they also help people manage their finances effectively.

CRAs also help to combat fraud by providing information about people who’ve been convicted of financial crimes. As a result, CRAs play a vital role in protecting both consumers and businesses from financial harm.

Are there any drawbacks of using a Credit Reference Agency?

The main drawback of using a CRA is that the three main ones don’t give you the same credit score. That’s because not all businesses report your financial activity to all three agencies. And the way they work out your credit score is different. This is why you need to check your score with all 3 agencies and not just rely on one.

Another drawback is that CRAs only record your information. This means they can’t give you specific reasons as to why you might have been declined for a loan application.

What are the different types of Credit Reference Agencies in UK?

1. Experian

Experian is one of the top three CRAs in the UK and are currently the market leader. They’ve been around for over 125 years, and they claim that their credit scores are the most trusted in the country.

2. Equifax

Equifax is another one of the top three leading CRAs leading in the UK. They’ve been around for over 120 years and operate in 25 countries. Like Experian, Equifax collect information on you and how you manage your money. They put this together to form your credit file.

3. TransUnion

The third of the top three CRAs in the UK is TransUnion. They too gather information on your financial activity and record it on your credit file. In 2018, TransUnion acquired the CRA that was known as Callcredit. Since then, they’ve started to be used by more lenders. But Experian and Equifax are still the CRA market leaders.

How can I access my credit report?

You can directly request your report from the three agencies: Experian, Equifax and TransUnion. There are a number of free sites that you can use to read your reports and improve your score.

1. Credit Club – Experian

Credit Club is a credit monitoring service, not a Credit Reference Agency. It’s run by Martin Lewis, the Money Saving Expert.  By signing up to this service you can see your credit report and score. They get their information from Experian.

2. Clearscore – Equifax

Clearscore is not a CRA, they’re a credit monitoring service. They claim to have the UK’s number one credit score and reporting app. They give you your credit score and credit report for free. They use Equifax to find out what your credit score is.

3. Credit Karma – TransUnion

Credit Karma isn’t a CRA either. Like Clearscore, they’re a credit monitoring service and they give you your credit score and report for free. But they get their information from TransUnion.

If you’re looking for the credit report for your business you could try Credit Safe. They aren’t a CRA, but they help businesses get access to credit reports. They help companies understand their own credit rating and help them check the reports on those they do business with.

How to choose the right Credit Reference Agency for your needs?

There isn’t one CRA that’s better to use than the others. That’s because all three Credit Reference Agencies have different information on you. Lenders don’t all report your financial activity to all three agencies. It’s why your score won’t be the same with all three.

If you’re taking out a loan, you could find out which CRA the lender you’re applying with will use. That way you can check your credit score with them before you apply and improve it if needed. Otherwise, you need to keep a check on all three agencies and monitor your credit score that way.

Can a Credit Reference Agency make a lending decision?

Although CRAs play an important role in the lending process, they are not themselves lenders. This means that they cannot make decisions about whether to lend money or provide credit. Lending decisions are always made by the lender.

What different types of services are offered by Credit Reference Agencies?

Credit Reference Agencies do more than just record information on people and businesses. They also do the following.

1. Credit risk and affordability

They offer tools to help lenders make more informed decisions about whether to approve applications. They provide information to help the lender decide if the person applying can afford the loan.

2. Fraud protection

CRAs provide services that help companies prevent fraud. They do this by helping companies verify people’s identity and help stop money laundering.

3. Government checks

Some government bodies might use the CRAs to help them check people’s entitlement to benefits. And they might use them to help recover unpaid taxes.

Final thoughts

In the UK, Credit Reference Agencies collect financial information about consumers and businesses. This information is then used by lenders to help them make decisions about whether to approve you credit.

There are 3 main CRAs in the UK: Equifax, Experian, and TransUnion. Each CRA has its own database of information which is why your credit score with each of them may be different. You can see what information they record on you by getting a credit report from them.

Overall, CRAs play an important role in the UK’s financial system, making it safer and more efficient.

Disclaimer: The above content is provided for reference only. Please visit the CRA’s main website for detailed information. Also, the external links linked here are only for reference and we are not affiliated to any of these external parties.