Your Guide to UK Credit Agencies

Credit is one of those things that many people prefer not to talk about – until they need it. Unfortunately, no-one has the right to credit. Instead, you need to earn the trust of the banks and other groups that might lend you money over the course of your life. You can do that in a variety of different ways, such as signing up for direct debits, and ensuring you pay all your debts on time.

Before any organisation will agree to loan you money, they’ll check something called your “credit score”, or your credit file. They do this by speaking to credit reference agencies. In the UK, there are three credit rating agencies that often support all lending opportunities. These CRAs are Experian, TransUnion, and Equifax.

Here’s everything you need to know about UK credit agencies, and how they work.

What is a Credit Rating Agency?

A Credit Rating Agency or CRA is the company that provides banks or building societies with information on potential borrowers. Lenders can use this information to make decisions about whether they should offer money to a person or not. Most of the information that the CRAs hold has to do with how you’ve maintained your accounts and credit in the past.

Your credit report will include details of your previous addresses, information from public sources, details from the electoral roll, and even details on county court judgements. Government bodies can sometimes look at credit data to see whether an individual is eligible for certain benefits and credits.

Credit Rating Agencies are certified by the FCA, or Financial Conduct Authority. These professional groups give every individual a number, or score that represents their current situation regarding credit. When you apply for a loan or a similar borrowing option, your lender will contact one of the agencies for your information and credit score. Your credit rating can then indicate how risky it is to lend to you and determine whether a lender will refuse or accept your application.

How Does a CRA Work?

The Credit Rating Agencies in the UK receive information from lenders that highlight how well you manage things like repayments and debts. This means that you have different credit scores from each of the three UK agencies, depending on the information they’ve preciously received.

Each company also uses a different scoring system. Experian requires you to have a score of over 880 out of 999 for you to have a “good” rating. On the other hand, with Equifax, anything over 420 out of 700 is good. Transunion offers a rating of 4 out of 5 as a good score.

The information available in a credit score differs depending on where you look. The main CRAs will keep information on you from your personal details, to credit ratings and financial history. This information differs from one agency to the next, and it’s a good idea to check out all of your credit reports if you want to boost your score.

Your credit rating file will include your date of birth, your address, and your full name. You may also be able to see any previous requests for credit, and joint applications too. Although lenders usually require information about your income and medical history when you apply for a loan, this information is not included on a credit report.

Can You Access CRA Information?

It’s not just banks and building societies that have a right to access your credit information. You can also check what your score is and examine your report for any inconsistencies or errors that you think might be preventing you from getting the money that you need.

Before you apply for a loan or another form of lending, it’s usually a good idea to check your credit file and see where you stand with the main CRAs. When requested, your agency will need to provide you with a free copy of your report. There are also partner sites that allow you to check out your report for free.

The CRAs can provide online forms where you can apply for your credit report much faster. However, it’s important to remember that you will need to provide some personal information to ensure that the credit providers can hand over your information.

If you write a letter to the credit agencies to request your full credit report, keep a copy of that letter – just in case you need it later. You should also think about sending the information through recorded delivery, so you can ensure it reaches its intended location.

Sometimes, the CRAs need extra details from you before they can send information on your file. For instance, your agencies might need proof that your address and name are what you say it is. This could mean that they ask you to send a letter from a bank, or a copy of your driver’s license.

Do You Need to Get 3 Separate Reports?

Just because the different credit agencies might have slightly different information about you, doesn’t mean that you need to get a report from all through agencies. Getting three copies of your credit reference information might be helpful if you need to prove that you’re a good risk for any bank or building societies you apply for credit with.

Another reason that you might want to get all three reports, is that this will allow you to make sure that all of the information the agencies are holding about you is accurate. People often assume that it’s the CRAs that are responsible for the information on their credit file. However, the companies that pass information to these agencies are partially responsible too.

It’s also up to you to be aware of what your credit report says about you, so that you can request adjustments if necessary. If you request a report from each of the credit agencies and you discover that your file information isn’t right, you can raise your concerns with the CRA that you obtained the information from. Remember, the problem might be with the original organisation or lender that supplied the CRA with the data in the first place.

After you contact the CRA and the original lender, if they’re unwilling to correct the error that you’ve found, then you’ll need to make an official compliant.

Can You Improve Your Credit Score?

Ultimately, data protection law doesn’t require any organisation to gain your consent before carrying out a credit check. This means that no-one can stop the banks and building societies that you apply with from checking your information. In fact, it’s the law for any lending company to examine your credit report before they offer any lending options for you. You should always be cautious if a company offers you a loan without checking your credit report.

Unfortunately, if you don’t have the best credit rating, it’s often very difficult to get the money that you’re asking for. Loan providers look at your credit score to determine how much of a risk you are. If you’re considered to be too much of a risk, then you won’t get the money you ask for, and you’ll end up with another mark on your credit file too.

The good news is that you can improve your credit score – but it does take time. Fixing any errors on your credit report is a good first step. You can also think about registering on the electoral roll, so that you can ensure all of the information that the agencies have about you is correct.

For the most part however, improving your credit score is a process that takes a lot of time and commitment. You need to prove that you can keep your credit use low and make repayments for any loans you take out on time. Having direct debits that you pay regularly can be helpful. It’s also important to show that you can pay off at least the minimum of all your debts.

Repeatedly making application for loans and other borrowing options reduces your risk of getting credit. If possible, consider looking for lenders that can conduct a soft check of your credit worthiness before pulling too much information from your credit report.

Can You Borrow with Bad Credit?

If you have a bad credit score and not enough time to fix the problem, then you may still be able to borrow money. The key to success here is making your application with the right lender. Do your research in advance and make sure that you know which lenders are willing to support you with a bad credit loan. Some companies will only give credit to people who have a certain score.

You can also look for the right kinds of loan to boost your chances of lending. For instance, you’re more likely to get a short-term loan or a secured loan if you don’t have great credit. That’s because there’s less risk involved for the lender with these loans as there is with other lending opportunities.

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