Credit Reference Agency

credit reference agency

When you apply for a loan with the help of Credit Reference Agency, you’re required to provide all the necessary information that the lender asks from you. Just like you want to avoid risks and get a cheap loan, your lender would want to make sure that you’ll be able to repay them. For that purpose, they would want to have a look at your credit history. Also, in case you have faced bankruptcy, you’ll have to inform them even after it has been removed from your credit file. 

So, the record of your past credits plays a significant factor in the ones that you get in the future. The lender will ask you to sign on a form that allows them to access your credit file so that they can check it and give you a credit score. Now, you may be curious about who maintains the credit reports of so many people. There are some credit reference agencies that have been given this task.

What do Credit Reference Agencies do?

The agencies that keep track of peoples’ credits are completely independent. They basically collect all the data about your credit activities and keep them up-to-date. In addition to your creditors, this would be helpful to you as well. You’d be able to know when your credit score is low and start taking steps to improve it. 

Also, in addition to keeping it updated, your credit reference agency can also save you from falling a victim to fraud in some cases. Let’s suppose that someone stole your identity and received credit in your name. In such cases, the agency will notify you of the changes in your credit record. And, you can then explain the situation to them. They will help you out and also inform the creditors about the fraud.

Do they Play a Role in your Loan Application?

The authority of your credit reference agency is strictly limited to keeping records of your credit activities. They are not responsible for accepting or rejecting your loan application whatsoever. Also, they share your credit records only with someone who has written permission with your signature on it. So, you need not worry about your information being shared with people with whom you don’t want to share it.

What kind of information does a credit reference Agency have about you?

They can collect and gather different kinds of information about you for their purpose. Further, they have the information about your bank accounts and also how quickly you have been able to repay your past debts. So, if you have made a late payment or missed one, they would know it. If you have faced legal proceedings related to debt such as bankruptcy, the agency will keep this data as well. 

All this information is very important to money lenders for deciding whether it would be safe to give you a loan. In addition to the ones mentioned, reference agencies also keep information on IVAs and bankruptcy for as many as six years. It is worth noting that your credit score would be affected throughout that duration before it can recover. 

Your credit reference agency would also have the information of the addresses you’ve lived in and those where you’ve been registered to vote. In case, your home has been repossessed, that would go into the credit record as well. Not only that, but they would also have information about your financial associations and the names of creditors who looked into your credit record.

How do they get all that information about you?

From what it seems, they have quite a lot of information about your finances. Moreover, they don’t collect it from you personally. So, you might wonder where they get to know all those things about you. If you think about it, all of the information they keep about you is more or less public, so it is not that difficult to collect them. All that’s needed is the authorization to do so, which all credit reference companies have. They can collect information from all companies or institutions that you’re financially associated with.

Can everyone have a look at your Credit File?

You might not be comfortable with just anyone peeking into your credit file. In that case, you’re not under any compulsion to give them access to your information unless they have a genuine reason to do so, as in the case of money lenders. Apart from them, creditors and debt recovery agencies can also look into your credit history. 

They might need it sometimes for figuring out how to recover the amount you owe them. Sometimes, your employers might ask for your credit record as well. This happens mostly in cases where you occupy or have applied for a job position in the financial sector. If you’ve gone bankrupt, you’d probably get barred or removed from that position.

Insurance companies have the right to see your credit reports as well to decide whether they should offer you their services. In some cases, such as for the purpose of legal proceedings, a government agency has the right to look into it as well. You would also be required to show your credit report to providers of utilities like gas and electricity.

What if there’s some incorrect information in your Credit File?

It is not so uncommon for people to find that there’s some information that is not accurate, let’s say not updated. Reference companies might make such errors while dealing with your information, but they also allow you to get them corrected. 

If you find any inaccuracy, you can write to the credit reference agency/company, and they will rectify their mistake. Though they’ll do that only after being sure that there has been an error, so nobody can make false claims about it.

How does your Credit Score get affected?

The only thing in general that can affect your credit rating is unpaid debt. If you miss an instalment of your monthly payment plan or pay it late, that will have a negative effect on it. That’s why it’s very important that you don’t borrow an amount that you won’t afford to repay. 

Stay away from bad debt and consult a financial adviser if you need to. Otherwise, it might take you to a situation as adverse as insolvency, and that is going to affect your credit score very badly. Even if you’re able to write off the debt with a relief order or an IVA, that won’t lessen the impact much. 

In case you go bankrupt, that’ll cause the most amount of damage. You’ll have problems getting credits after that until the credit score improves. Yet another thing that can affect it is too many applications for loans. So, you must try to be sure that your application will be accepted. The credit reference agency would be able to assist you in doing that.

What should you do in case your application for a loan is rejected?

If a lender backs out due to your credit score being low, you need not be worried, as there are other options as well. You can try to find a guarantor who will repay the loan in case you’re unable to do so. Though this person should have a good score too, in order to be eligible for this. In case, you’re unable to get a loan, there are still other options for you. In fact, not all lenders have the same parameters for calculating the credit score. That means you can try applying to some of the others as well.