Credit Reference Agencies in the UK have a key role to play in the way that consumers interact with financial institutions. Any time that you make an application to borrow money, for example, the information that an agency has compiled about your financial history will be checked by the lender. Credit Reference Agencies generate their own credit scores from this information too. Although lenders don’t use these scores they can still be a good indicator of whether you’re likely to be successful when applying for credit. Given the importance of the information that Credit Reference Agencies hold on all of us where exactly do they source it from?
Data the agencies DO have
When a lender accesses your credit file they won’t see whatever score that Credit Reference Agency has compiled about you. What they will see is a range of different pieces of data that will be used to build up a picture of your creditworthiness. It’s worth noting that the maximum length of time data is likely to stay on your credit file is six years (e.g. for late payments) – most of it (e.g. other searches carried out) will disappear more quickly. This information includes:
- Information that can be used to personally identify you. One of the key steps of a credit check is verifying who you actually are. So, Credit Reference Agencies collect a wealth of data that can be used to do this. It may include your current and past names, a list of your past addresses and your existing address, as well as whether your name is on the electoral roll (i.e. are you registered to vote?).
- Anything that is a matter of public record. That could be a County Court Judgement, bankruptcy or house repossession, for example.
- How you’ve handled credit in the past. Your credit file will contain details about credit that you’ve had in the past, whether that’s a mortgage or a personal loan, credit card or store cards. Lenders will be able to see how you handled that credit i.e. whether you made repayments on time or there were issues.
- Your current situation with credit. Credit Reference Agencies also compile information on your existing credit agreements, how much you’ve borrowed and whether you’re up to date with payments.
- Who else has looked at your credit file? Credit Reference Agencies keep a record of the lenders who have carried out a search of your credit file and the type of search that has been done.
- Any financial associations that you have. This could be someone you once had a joint mortgage with or an ex-housemate that you shared the bills with.
Data the agencies DON’T have
- Employment history
- How much you earn
- Criminal convictions
- Current accounts
- Details of your student loans
- Any information about medical history
- Council tax payments
- Data that would indicate religion, sexual preferences etc
Where does this data come from?
- Anyone you have a credit relationship with. Lenders etc don’t have to send this information to Credit Reference Agencies but most do because it benefits their industry (and their interests) to have it on record in this way. Banks, mortgage lenders, credit card companies and credit unions are just some of the businesses that will regularly provide updates to Credit Reference Agencies on your current credit position. Others, such as lawyers and accountants or insurance companies, may only do so if you default on payments.
- A debt collection agency. If you owe money on an outstanding debt that you haven’t paid a debt collection agency may send this information to a Credit Reference Agency as a way of trying to put more pressure on you to clear the debt.
- Information from credit providers. Every time you make an application for credit all the data in that application will end up in the files of Credit Reference Agencies.
- Public records. Most agencies will invest time and effort trawling through public records looking for information about consumers with which to update their files. There will be information here that is key for lenders, for example with respect to bankruptcy or entering into an Individual Voluntary Arrangement.
It’s important to understand what kind of data is in your credit file, as well as where this has come from. Most of the time it is up to consumers to regularly check their credit history and to ensure that the information provided by the sources that Credit Reference Agencies use is correct. So, if you want to avoid having a credit problem then it’s key to ensure you know what’s in your credit file – and that you check it on a regular basis.
How to Manage Your Credit Rating
This 4-minute video explains in more depth how you can go about actively managing your credit file to ensure it reflects reality – this includes how to remove incorrect data held about you that might adversely affect your ability to get credit in the future:
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