What’s a credit reference agency?


What’s a credit reference agency?

Whether you’ve borrowed before or you’re thinking of doing so, it's a good idea to regularly check the information the credit reference agencies hold on you.

But what is a credit reference agency? Let’s take a look.

The big three

There are three main credit reference agencies in the UK: Experian, Equifax and Callcredit. You can sign up to all three to check the information they have on you.

Callcredit lets you check your credit history for free through its service Noddle, or you can sign up to its pay-for service Credit Compass to get daily updates and identity theft alerts.

Equifax also offers a free service – ClearScore – or you can sign up for a free 30-day trial with Equifax itself. You can find out how we rated Noddle and ClearScore here.

Finally, Experian provides its own free service, CreditMatcher, which gives you a free credit score. Alternatively, you can sign up for Experian’s more comprehensive service, which also comes with a free 30-day trial.

So, now you know what the UK’s three credit reference agencies are, what do they actually do?

Your credit history

With three different credit reference agencies, each offering its own additional services, all of this can seem a little complicated. But what they all have in common is that they keep a record of your financial details going back over the last six years.

When you apply for credit, the lender you applied to will use one or more of these credit reference agencies to access your credit history. Looking at how well you’ve managed your credit agreements in the past is one of the ways they work out the level of risk you present to them.

What are lenders looking for?

A lender will look at your credit history to see how much credit you have available to you. They will look at whether you have made your repayments to your existing lenders on time each month, or whether you have been late or even missed one altogether. They will also look to see if you’ve been on a formal debt solution.

Other points lenders will take into consideration are your income, your employment status, your current and previous addresses and whether or not you’re on the electoral roll. You can find more details on what lenders look at here.

The good news is that when you access your credit history through one of the credit reference agencies, you can see what your lenders see. If you’re thinking of applying for credit, whether it’s a credit card, loan or mortgage, visit a credit reference agency and have a look at your credit history to see if there’s any marks like missed payments that may prevent you from being accepted for credit.

Which should I use?

The tricky thing is each lender uses a different credit reference agency, or a couple of different agencies, to access your credit history. And while each agency should hold the same information on you, there might be one that shows you having a mark left on your credit history by an error, while the others have removed this. It’s therefore a good idea to sign up to at least two of the credit reference agencies – or to the three free services – so you can check that the information they hold on you is all correct.

As well as signing up to more than one of the credit reference agencies, we recommend checking your credit history once a month. You can find out why we think it’s such a good idea here.

We hope that’s answered your question about what a credit reference agency is. You’ll find plenty of answers to frequently-asked financial questions on our blog