What is a Credit Reference Agency?

At some point in our lives we will all apply for credit – be it a car loan, a mortgage, a mobile phone contract or a new credit card.

And whenever you apply for credit, the lender will approach a credit reference agency for information about your credit history.

This is to help them make a fair and responsible decision about whether to give you credit. It will also help them protect themselves against fraudulent applications – a growing problem in the UK.

Read on to find out more about credit reference agencies and the role they play in your credit application.

How many credit reference agencies are there?

In the UK there are three main credit reference agencies – TransUnion, Equifax and Experian.

They work with building societies, banks, mobile phone companies and other major retailers to help those businesses make a quick and accurate decision about whether the person applying for credit is likely to pay it back.

Why do we have credit reference agencies?

Credit reference agencies exist because lenders need an accurate way to judge people’s creditworthiness.

Before credit reference agencies, banks and other lenders had to find their own ways to filter out unsuitable borrowers, which often led them to make wrong decisions – denying reliable people credit and lending to those who could not repay.

As a result of many years of development and investment, the UK is considered to have one of most sophisticated and efficient credit referencing systems in the world.  This capability enables lenders to make the right decisions when evaluating customer credit risk and affordability.

Do credit reference agencies make lending decisions?

No – credit reference agencies will not decide whether you are to be given credit. That is the lender’s decision.

Credit reference agencies are independent organisations that hold the information that lenders use to decide whether you should get credit. They play no part in the actual decision-making process and the information they hold is entirely factual – with no opinions about it expressed.

What information do credit reference agencies hold?

Credit reference agencies hold personal information and details about your financial history.

This includes:

  • Your presence on the electoral register
  • Any court judgements made against you
  • Any bankruptcies or insolvencies
  • Your past and current credit agreements, including how much you owe and your repayment history

What is a ‘footprint’?

Each time you apply for credit and a lender searches for your credit report, the credit reference agency will keep a record.

This is called a footprint. TransUnion retains these footprints for two years, Experian and Equifax retain footprints for one year.  

Organisations searching your credit file will not be able to see who has accessed your report but credit references agencies can make this information available to you.

How can you find out what information TransUnion has about you?

The best way to find out what information TransUnion has about you is to check your credit report. Even if you are not currently applying for credit, you should do so to ensure the information we have is accurate.

You can find more information about which credit report is most suitable for you in our consumer help section.