Terms like credit score, credit report, and credit agencies can trigger nightmares even in the cleanest citizen. It is easy to understand why.

Accessing a loan or even getting a credit card can be extremely difficult unless you have a good credit history.

Nevertheless, most people find it hard to understand the mechanics of credit agencies. In this article, we aim to throw some light on the matter. Find out which are the credit agencies in the UK, what data they use to generate your report, and how the credit score impacts your borrowing potential.

Credit Agencies in the UK

Credit Agencies - Woman checking her finances

Credit report – that scary thing lenders check before accepting your loan application – is compiled by credit reference agencies, commonly referred to as credit agencies or CRAs. There are three of them in the UK, TrustUnion, Experian and Equifax.

These credit agencies gather information about individuals and use it to create credit reports. Most of this information comes from your credit history and is given to the agencies directly by lenders.

Other information included in your credit score comes from public sources, such as electoral registers, but also utility suppliers, landlords, and local councils.

Once the report is generated, credit agencies calculate your credit score and use it to help lenders decide whether they should accept your credit application. 

Due to different calculation systems, however, your credit score can vary from company to company. Also, each company can only calculate your credit score based on the information they hold. For instance, if a lender decides to transmit information on how much credit you have and how you manage it to one CRA, the other two agencies won’t be able to include this information in your credit report.

Regarding the maximum scores you can get, they are:

  • Experian – 999
  • Equifax – 700
  • TrustUnion – 710

Since credit agencies use complex algorithms to generate your credit score, know there is nothing to worry about if your result doesn’t meet the maximum threshold. If the information held by the agencies is accurate, your creditworthiness will not be affected by a lower score.

How to Check Your Credit Report?

Having a full picture of your creditworthiness is always important, but it may be crucial before applying for a credit card, loan, or mortgage. The easiest way to check your credit score and credit report is directly from the agencies generating it.

Experian allows everyone to register and access their credit scores for free. However, you will not have access to your credit report and will have to subscribe to their CreditExpert service if you want to see your full report. Although you’ll get a 30-day free trial, you will still have to provide your card details during registration.

Equifax gives you access to a free credit score and reports upon subscribing to their 30-day trial. You will still have to provide payment details, but you can opt out at any time.  

TrustUnion’s Noodle gives you access to a free credit report. You can also see what factors are affecting your credit report, sign up for alerts, or subscribe to their web watch service by paying annual fees.

If you want to see a statutory copy of your credit reports, know you can ask all three agencies for one for a fixed fee.

How Does Your Credit Score Impact on Your Borrowing Potential?

Credit Agencies - Credit Cards

Most people believe a bad credit score simply means they won’t be able to access a loan. While this is not always true, your credit score has a huge impact on your borrowing potential.

In the worst-case scenario, banks and building societies may indeed reject your application. A rejection can be caused either by a poor credit report or by the lack of it. In fact, young adults with little to no credit history could find it harder to get a loan than those who have a bad credit score.

A less-than-ideal credit score can also determine lenders to apply higher interest rates. If you’re applying for a credit card, the bank could set a low spending limit, and you may find it difficult to raise it.

Your credit report can also dictate how much money you can borrow. People with a good credit history may have access to higher loans, whereas those with a poor history may only get small amounts.

How to Build and Improve Your Credit Score?

Since the credit score can turn the odds of accessing funds in your favour or play against you, it is important to build and improve it. Here are a few strategies to follow:

  • Pay all your debt on time. Whether it’s your utility bills, rent, or council tax, make each payment before the due date. All three credit agencies gather data from utility suppliers and landlords to generate your report and calculate your score.
  • Try to have mixed debt. It is hard to build or improve your credit score if you only have one type of debt. Mix things up by getting a credit card and paying your debt on time, get a retail account, and if you can, get an instalment loan too.
  • Dispute any inaccuracies. While credit reports are usually accurate, errors can happen. Check your credit score and report regularly and dispute any inaccuracies. Usually, it is enough to contact the credit agencies and provide proof that you paid everything on time to have any errors corrected – and your credit score improved.

Conclusion

When it comes to borrowing money, your credit score can make or break the deal. An easy way to estimate your application success is by checking the score before applying for a credit card, loan, or mortgage.

Since every lender can use a different provider, we recommend checking your credit score with all three credit agencies in the UK. In this way, you can either fix any errors or work on improving your score if needed.

DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.