What is a credit reference agency?

Credit reference agencies are organizations that store and put together financial information alongside publicly available information on almost every single adult in the United Kingdom. It's important you understand that credit reference agencies don't actually make decisions about whether credit is given. Their task is to provide the lenders with factual information upon which they can make their decision

The information that is provided by a credit reference agency falls into two categories. The first is credit account information and the second is public information

Public information consists of that in the electoral register, which is provided by local authorities, county court information, from the Registry Trust Ltd, and bankruptcies, from the London and Scottish gazettes. You need to make sure that you are on the electoral register, especially if you have recently moved. Now is the time to fish that envelope from the council out of your drawer that you've been ignoring. If you're not on the electoral register, you may as well not exist as far as credit reference agencies are concerned. The Registry Trust can tell the credit reference agency whether you've had any county court judgments (CCJs) against you.

Credit reference agencies hold credit account information on behalf of lenders. The major credit-granting institutions in the UK store information about any credit agreements they have with borrowers with the credit reference agencies.

Lenders share this information. They are happy to do this because they may each have a need for the information at one point or another as well as providing it. Credit referencing agencies are a centralized information provider, shared also by the credit-granting institutions, as credit referencing isn't a function that adds value to customers so can be outsourced to specialists. The fact that there is a central source for credit information means that each lender can find out if the applicant has repaid loans in the past by referencing each institution.

Your application is supported by favourable information such as evidence that you have repaid your loans on time. Your application is likely to be adversely affected though by evidence that you've had trouble repaying your loans. History has suggested that those who have had financial difficulties in the past are more likely than others to have difficulties in keeping up repayments successfully in the future. Should you also be going through financial problems, it is not a good idea to take on more credit.

Credit reference agencies are not your enemy. They have to provide factual information on you. It is therefore in your interests to make sure that the facts that they hold are correct and up to date. See it as a partnership, and you can make them work for you.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2008

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