What Is A Credit Reference Agency

The name ‘credit reference agency’ is a UK term, and can change when you leave the country. Other countries have adopted the following names:

– Credit Bureau

– Fair Credit Reporting

– Consumer Reporting Agency


What does a credit reference agency do?

They are a company that provide credit information about individuals upon request by companies in which the individuals have signed permission for the said company to contact and lookup the individual’s background. This credit information usually being history of ability to pay bills, any existing or past existing loans, history of delinquent debts, or currently standing debts. This shows the company whether the requested individual is capable of paying for the company’s service.

Individuals can get hold of their own credit report themselves. There are things a consumer can do to improve their rating, and reviewing a report is the first step toward correcting the problems. Sometimes credit can be declined on the basis of one area of your report, so it is useful to identify that area to aid taking positive steps toward fixing the problem.

How does the credit reference agency work?

A credit reference agency has many partnering 3rd party companies which report all data to the credit reference agency. The agency stores files of all of these people whether they have current requests to report them or not. Some of the companies which contact the credit reference agency are utility companies, loan companies, creditors, courts, collection agencies, and much more. Typically the companies that request the information from the credit reference agency are mortgage companies, lenders, credit card companies, rental companies, or anyone who would need a factual outside source other than the individuals’ word to properly assess whether they are capable of paying or managing credit. Some examples of credit reference agencies are;

– In the UK – Experian, Equifax, and Call Credit, partnering with the Trans Union.

– In the US – Experian Business, Equifax Small Business Financial Exchange, and Dun & Bradstreet.

– In India – Credit Information Bureau Limited, Trans Union, and Dun & Bradstreet.

How does a credit reference agency create a score?

A credit reference agency uses specific methods of mathematics to create an average of the person’s ability to pay their debts and rates the overall score with a single number giving the companies requesting to view the credit score an easy to understand factor to judge the persons’ financial stability and ability to commit to repayments.