What are credit reference agencies and what do they do?
Credit reference agencies (CRAs) are companies that hold information about people’s credit history. The information comes from various sources including lenders and court records. CRAs share information about you with lenders that can help you get credit. This includes things like loan applications and any money you owe. They can only do this with your consent. The information a CRA holds about you is called your credit report. They will leave most information on your credit report for six years.
Credit scoring
If you apply for credit, a lender will look at information about you. This may include information such as your age, occupation and whether you own a house, as well as what is shown on your credit reference file. Lenders often use something called ‘credit scoring’ to assess this information. If you do not score above the lender’s pass level, your application may be turned down.
What can I do if I am turned down for credit?
There is no automatic right to credit, but some companies may tell you why you have been turned down.
Ask the lender if they used a credit score to make their decision. They should tell you if you didn’t pass or if you were turned down for any other reason.
If you were turned down because of information in your credit report, ask the lender which credit reference agency they used. You have a right to ask for a free copy of your credit report under the Data Protection Act 2018.
If any information on your credit report is wrong, you have a right to ask the agency to remove or correct it.
If you are in debt, you can ask the CRA to put a notice on your report explaining why you got into debt. You may want to explain your financial circumstances and how your situation has changed.
If you are unhappy about how a CRA has dealt with your credit file, you have the right to complain to the Financial Ombudsman Service. You will have to follow the agency’s complaints procedure first.
