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What is a credit reference agency?

At some point in our lives, we’re likely to apply for credit — whether for a car loan, mortgage, mobile phone contract or new credit card. Whenever you apply for credit, the lender will approach a credit reference agency for information about your credit history. This helps them make fair and responsible decisions about whether to give credit. It also helps 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.

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 quick and more accurate decisions about whether the person applying for credit is likely to pay it back.

CRAs exist to promote responsible lending, support debt recovery and debtor tracing, as well as prevent over-commitment, bad debt, fraud and money laundering.

Before credit reference agencies, banks and other lenders were left to their own devices to filter out unsuitable borrowers. This 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 the most sophisticated and efficient credit referencing systems in the world. This enables lenders to better evaluate consumer credit risk and affordability and make the right lending decisions.

No. Credit reference agencies are independent organisations that hold consumers’ credit-related information, but the decision to grant credit rests with the lender. Also, the information held is entirely factual — with no expressed opinions.

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

Each time you apply for credit and a lender searches for your credit report, the credit reference agency keeps a record. This is called a footprint. TransUnion retains these footprints for two years; Experian and Equifax generally retain them for one year.

Organisations searching your credit file won’t be able to see who has accessed your report, but credit references agencies can make this information available to you.

When an organisation searches information about you on a CRA database, because you have applied for credit for example, it gives the CRA the reason for the search.

Checking your statutory credit report is the best way to see what information TransUnion holds about you. Even if you’re not currently applying for credit, you should do so to ensure the information is accurate.

You can do this by applying for your statutory credit report, or you can find more information about which credit report is best suited to you in our consumer help section.