Credit Reference Agencies (CRAs) are a key part of our financial system. They’re independent companies that collect and store information on people and businesses. But they do this in a secure way. The information they hold can only be seen by businesses who have a valid reason for looking at it.
What is a Credit Reference Agency (CRA)?
Credit Reference Agencies gather information about your credit history which they store in your credit file. This is made available to lenders to review when you apply for credit. Having this information in one place is useful for two reasons.
- It makes lending decisions easier and quicker to do
- It helps to provide better protection against fraud
What do Credit Reference Agencies do?
Credit Reference Agencies collect information from various sources which they use to make up your credit file. But the information is based on facts, they don’t add comments on what type of borrower you are. The facts they gather come from:
- Banks
- Credit card companies
- Loan companies
- Public records
Your credit report holds information that helps businesses identify you which helps in the fight against fraud. Your credit report also shows information on your credit history. It lets lenders see how well you’ve managed your debts in the past. This gives them a quick and accurate way to assess if they should lend to you.
CRAs will use your credit report to work out your credit score. This is a number that gives you an idea of how well you’re managing your money. The higher the score, the easier it is to borrow money.
How many Credit Reference Agencies are there in the UK?
We’ve got three main Credit Reference Agencies in the UK that work independently of each other. This means you’ll have to get your credit report from all three agencies to find out what’s being reported on you.
The three UK agencies are:
- Experian
- Equifax
- TransUnion
How does a Credit Reference Agency collect information?
Credit Reference Agencies collect their information by:
- Relying on banks and other lenders to report your account activity to them
- Reporting what’s been recorded about you on the Public Register. This could be information such as County Court Judgements or bankruptcies.
- Reporting other public information such as whether you’re registered on the electoral roll
How do Credit Reference Agencies use this information?
Credit Reference Agencies use this information they collect to build your own unique credit report. They use it to work out your credit score. Your credit score is a number that gives you an idea of how credit worthy you are. It’s an easy way of seeing how well you’re managing your money.
Not anyone can use the information on your credit report. The CRAs store it safely so that it can only be seen by businesses that have your permission to view it.
What information is included in a credit report?
1. Basic personal information
This includes:
- Your name
- Your date of birth
- Your current address and your previous ones
2. If you’re registered on the electoral roll
Being on the electoral roll is public information. Credit Reference Agencies include this in your credit report as it helps lenders to verify you.
3. All your credit accounts
Any financial accounts you have will appear on your credit report. This would include accounts you have with banks, as well as any type of loan or lines of credit. It also shows how well you manage these accounts.
4. Public information
Information about you that’s on the public register can be reported on your credit file. This would include if you’ve been made bankrupt or if you’ve had a Country Court Judgement.
5. People who you’re linked to financially
When you take out a joint bank account or loan with someone, that other person appears on your credit file. It means that if you apply for credit in your sole name, the lender may look at that other person’s credit file.
How can I get my free annual credit report?
You can get a free credit report in two main ways.
1. You can get a free credit report direct from the Credit Reference Agencies
Credit Reference Agencies must let you have a free copy of your credit report once every 12 months. You can get hold of yours if you set up an account with them. They’ll then give you the option of seeing your credit report online, by email or by post.
2. You can get a credit report from a credit monitoring service
Credit monitoring services will let you see your credit report if you sign up to their services. Some of the most popular credit monitoring services are:
- Money Saving Expert’s Creditclub
- Clearscore
- Credit Karma
Why is my credit score different with each of the Credit Reference Agencies?
When you get your credit score from the CRAs, don’t be surprised if the number isn’t the same with all three. There are two reasons why your credit score differs between them.
1. Each CRA uses slightly different credit scoring ranges
The three main CRAs in the UK don’t score you in the same way. They each have their own way of scoring you which means your credit score won’t be the same with all three. In the table below you can see the difference between their credit scoring ranges.
| Credit Score Range | Very Poor/Poor | Fair | Good/Very Good | Excellent |
|---|---|---|---|---|
| Experian | 0-720 | 721-880 | 881-960 | 961-999 |
| Equifax | 0-438 | 439-530 | 531-810 | 811-1,000 |
| TransUnion | 0-565 | 566-603 | 604-627 | 628-710 |
As you can see, if you had a credit score of 650 you’d be rated as being excellent with TransUnion. But with Experian, a score of 650 would rate you as having a poor credit score.
2. The CRAs may not have the same information on your credit report
Although lenders should report your account activity to all three agencies, not all of them do. This means that the information may not be the same with all three CRAs. So, the information one agency uses to work out your credit score won’t be the same as another agency.
Remember, your credit score isn’t set in stone. If your credit score is poor with one of the Credit Reference Agencies, there are things you can do to change it.
How can Credit Reference Agencies help you improve your credit score?
There are ways Credit Reference Agencies can help you if you want to improve your credit score. You’ll have to register with them to benefit from all their services, and they’ll charge you fee for this. But they all offer a 30 day free trial so you can try it out first.
They can help in the following ways:
- By giving you tips on how to improve your credit score based on information on your credit file
- Providing information to help you understand your finances better
- Updating your credit score when new information is added to your credit report
- Sending you alerts if information on your credit report changes for any reason
- Showing all your accounts in one place which helps you to monitor your debts
What are the benefits of using a Credit Reference Agency in the UK?
The benefit of using a CRA is that they’re a reliable source of information on people’s credit histories. This is helpful for lenders as it means they can speed up the process of making lending decisions. It also gives them information they can trust which helps prevent fraud.
Credit Reference Agencies benefit you as they give you a central place to see all your financial accounts. It helps you to keep on top of your finances and manage them well.
Are there any drawbacks of using a Credit Reference Agency?
There is one main drawback of using a CRA, and that’s to do with your credit report. As they may not all have the same information, you can’t rely on just one agency. You have to look at your credit report with all three to check what’s being reported on you. This is also one of the reasons why your credit score is different with all three agencies.
Another drawback is that CRAs can’t tell you if you’ll be approved for a loan, they can’t make lending decisions. This is for two reasons.
- Lenders each have their own criteria that they use to decide whether to give you a loan
- Lenders don’t just use your credit report to make their decision, they’ll look at things like your income, outgoings, and employment. If you’ve been declined for a loan you’d need to ask the lender to find out why.
What are the different types of Credit Reference Agencies in UK?
1. Experian
Experian is a market leading CRA in the UK that have been around for over 125 years. They’ve created ways to help improve your credit score with their own unique tool called Experian Boost. Using this service can increase your credit score by up to 101 points.
2. Equifax
Like Experian, Equifax is one of the top three leading CRAs in the UK and were formed over 120 years ago. Just like all CRAs, they collect information on people and businesses to create their credit files. They were the first agency in the UK to give people access to their credit report online.
3. TransUnion
TransUnion took over Callcredit to become another of the top three CRAs in the UK. They launched their open banking platform in 2019 which helps lenders make their lending decisions. Drafty use open banking to help with our lending decisions.
4. Clearscore
Clearscore is a credit monitoring service, not a Credit Reference Agency. They claim that their credit score and reporting app is the best in the UK. You can use Clearscore to view your credit report, but it’ll be based on information held with Equifax.
5. Credit Karma
Credit Karma is another credit monitoring service. You can get your credit report from them, but this will be based on information held with TransUnion.
6. Callcredit
Callcredit were taken over by TransUnion in 2018. You can no longer get your credit report from Callcredit, you’d have to go to TransUnion instead.
There is also a company called Credit Safe. They aren’t a CRA, but they help businesses check credit reports for companies they deal with. They also help businesses understand their own credit rating.
How to choose the right Credit Reference Agency for your needs?
If you want to know which Credit Reference Agency to choose, you’d have to ask the lender which one they use. Although lenders should report to all three of them, some don’t. This means the information each of the CRAs hold on you isn’t always the same.
The best way to stay on top of your finances is to keep a check on what’s being reported on all three agencies. That way if an error is made, you’ll be able to get it put right before it affects your credit score.
Can a Credit Reference Agency make a lending decision?
No, a Credit Reference Agency can’t make a lending decision, these will always be made by the lender. A CRA can only provide the information to help a lender make their decision.
What different types of services are offered by Credit Reference Agencies?
Credit Reference Agencies offer more than just credit files on people and businesses. They provide other services which include:
1. Credit risk and affordability
This is where they provide lenders with services to help them with their lending decisions. The CRAs offer tools to help lenders decide if the person applying can afford the loan.
2. Fraud protection
CRAs make a difference in helping prevent fraud. This is because they allow companies to check people’s identities and can help stop money laundering.
3. Government checks
CRAs might be used by some government bodies who need help checking people’s entitlement to benefits. The government might also use CRAs when trying to recover unpaid taxes.
Final thoughts
Credit Reference Agencies have an important role to play in the UK’s financial system. By collecting financial information about people and businesses, they’re a reliable source for companies to use. This includes lenders who rely on looking at credit files to make their lending decisions. It means they can approve loans quicker and it helps avoid fraudulent applications.
We have three main CRAs in the UK: Equifax, Experian, and TransUnion. It’s worth checking your own credit report and credit score with all of them. This is because the information might not be the same with all three.
Credit Reference Agencies can be trusted to inform and support us, and they help keep our finances safe.
Disclaimer: The above content is provided for reference only. Please visit the main website of each CRA for more information. The external links linked here are only for reference and we are not affiliated to any of these external parties.
