Credit reference agencies: Who are they, what is the difference and who do lenders use?

When you apply for credit, like a mortgage, a loan or a credit card, the lender will consider your application carefully. This typically requires a credit check and a look at your affordability (i.e. can you afford to pay this money back). But each lender has their own exact method to come to a decision.‍

You can read more about credit checks here, but the gist of what you need to know is that credit checks are run against your credit report. Which is compiled of information about you and your financial history. The UK’s main three Credit Reference Agencies generate your credit reports (and create your credit scores, to help you understand how a lender may view your report). 

Generally speaking, the higher your credit score, the more likely you are to be accepted for credit and be offered a better deal. This isn’t always the case, check out our blog about having a good credit score but refused a loan for more information. But we’d always suggest that you make sure your credit score is as healthy as possible. 

So who are these CRAs? How many of them are there, what’s the difference between them and which ones do most lenders use? Loqbox is here to help you get to know your CRAs and understand how they work!

What is a credit reference agency (CRA)?

You might know them as credit reference agencies. But you may also hear them described as credit check companies, credit score companies, credit report companies, or credit score agencies. ‘Credit bureaus’ and ‘credit reporting agencies’ are terminology you’ll hear in the US financial market. But we’ll call them credit reference agencies (or CRAs for short). 

Credit reference agencies are independent companies that hold data about you. This includes your accounts, financial history, credit applications, and some personal information. The CRAs use that data to create a credit report, and to calculate your credit score to help you decipher the report. Your credit report is what’s used by lenders to make decisions about your credit applications.

The CRAs themselves do not actually make decisions about your credit applications. If you apply for a mortgage and you’re refused, that decision comes from the mortgage provider, not the CRA. Lenders provide information about you to whichever CRA they work with, which in turn generates a credit report (and a credit score). This report helps creditors better understand your creditworthiness. 

5 details credit reference agencies hold about you

In order to calculate your credit score, CRAs use several different bits of information to put together your financial history. This lets lenders know how creditworthy you are. Examples of the types of information that CRAs have about you include:

1. Your electoral roll registration. This shows the address where you are registered to vote, previous addresses that you have been registered to and the dates that you lived there.
   
   
2. Your account history. This shows your history of managing other accounts such as previous borrowing and bank accounts (including any missed payments).
   
   
3. Your public records. This will show any county court judgments (CCJs), bankruptcies, Administration Orders and the like.
   
   
4. Your financial associations. These are any people that you are financially linked to. Perhaps a joint account or somebody that you have applied for a credit card with.
   
   
5. Your previous searches. These are records of searches that other creditors have done on you in the past 12 months.

If you notice anything on your credit reports that should have expired (missed payments, CCJs or defaults should only stay on there for six years) you can ask for it to be removed.

What you may not know is that there are actually three main CRAs in the UK. But who are they and what is the difference between them?

Who are the three credit agencies and what’s the difference between them?

There are three main CRAs in the UK. They’re called Experian, Equifax and TransUnion (in no specific order). But what’s the difference between them and why are there three?  Loqbox is here to untangle the mystery!

What is the difference between Experian, Equifax and Transunion?

Each of the three CRAs hold different financial information about you and they all calculate their credit scores differently.

This is mainly because they each collect data from the companies you handle credit with — from your credit card company to phone contract provider. Your water bill may be reported to Experian only, or your car finance could be reported to TransUnion and Equifax.

For this reason you will actually have a credit report from each agency, and that also means you have three credit scores rather than one. There is no such thing as a universal credit score. You can find out more about how each of the CRAs score your credit history and what is a good credit score here.

To find out what your credit score is with each of the three different CRAs, you can check for free and without hurting your score. To learn more about checking your credit score, head over to 'Your credit score explained'.

It is a good idea to know your credit score with each of the CRAs. It is possible to have a “fair” credit score with one credit agency but a “poor” rating with another. This could be because of the unique ways that they calculate your score but it may also be that you have an error on one. Find out how to correct errors on your credit report here.

Which credit agencies do lenders use?

The truth is that different lenders use different CRAs to check on your financial and credit history. So it isn’t always obvious which of your three credit reports is being looked at (this is why working to raise all three of your credit scores matters)!

If you’re worried that your credit scores are looking very different across Equifax, Experian and TransUnion, there may be some mistakes or errors on your report with one of them. Fixing errors and mistakes is straightforward enough (read more here) but it takes time to update your report and score.

If you’re looking to take out a mortgage, credit card or loan soon, you can ask the lender to tell you which credit reference agency they will run the hard credit check with. That way, you’ll have a better idea of your likelihood of being accepted.

Now you know the (credit) score, what next?

Once you’ve got your head around the main CRAs in the UK, you’ve checked your scores are right and that your credit reports are error-free on all three, what next? Well, if your credit score is lower than you want or need it to be, why not get started with Loqbox? It’s a proven way to build your credit score. 

With a Loqbox membership, you can:

Use Loqbox Grow to help give your score a boost of 125 points on average. (Plus learn what you need to know to master your money with Loqbox Coach!) 

Grow your credit score while you save with Loqbox Save. Use your rent payments to build up your credit history with Loqbox Rent.