Credit Bureaus

Credit Bureau is another term used to describe a Credit Reference Agency. Credit Bureaus are companies that collect information from a number of sources in order to provide consumer credit information on individuals that can be used for a variety of purposes. Primarily, the credit information supplied by credit bureaus is used to help lenders assess the credit worthiness of individuals (assessing their ability to pay back a loan).

This credit worthiness can impact on the interest rate and other terms of a loan. Generally speaking, the lower an individuals credit worthiness, the higher the interest rate of the loan will be (due to risk-based pricing). Also, the higher the credit risk, the lower the amount of credit that will be available to individuals.

Who are the Credit Bureaus?
There are 3 credit bureaus in the UK, namely Equifax, Experian & CallCredit. The information that they compile comes from a range of sources, where individuals have ‘lines of credit’ (where people have agreements regulated by the Consumer Credit Act). Examples of companies that credit bureaus can obtain credit information from include: Banks, credit card companies, loan companies, utilities companies, telecoms operators, insurance companies, leisure operators / gyms & debt collection agencies / debt purchase companies (amongst others).

Such organisations send a consumers credit / payment performance to the credit bureaus. The credit bureaus then aggregate this data in order to create credit files for individuals. These credit files are then made available to you as an individual, and to organisations where you have applied for credit (so that they can conduct a credit assessment on you). In some instances, a prospective employer may also wish to see a copy of your credit report (particularly in finance based roles), in order to demonstrate that you are able to manage money effectively, and pose no financial risk to the company.

In addition to payment performance data, credit bureaus will collate information from public sources such as county court judgements and electoral roll information.

Legislation of Credit Bureaus:
Credit Bureaus are bound by the Data Protection Act, which requires that data relating to identifiable individuals must be accurate, relevant, held for a proper purpose and not out-of-date. Individuals have a legal right to access data held on them. The credit bureaus are also governed under UK law by the Consumer Credit Act 1974

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