Credit Reference Agencies Explained

Nobody has a right to credit. When you apply for any form of credit the lender, such as a loan company, shop, bank etc will want to look at your credit history. Basically they want to be sure that you will be able to repay the loan.

To do this they will probably contact a Credit Reference Agency. Credit Reference Agencies have information stored in a Credit File, on everyone who has, or has had, any form of credit. The information on this file will be supplied to the potential lender and they will make a decision based on what they see on your file.

It is important to remember that a Credit Reference Agency does not make any judgement or decision on a person's credit worthiness. They just keep a record a person's credit history. The lender will make a decision based on what they see in the file. If one lender turns down an application it does not mean they all will.

All lenders, whether banks, shops or loan companies all share information about the credit they have given and how the debt was repaid. This is information is passed on to the Credit Reference Agencies. A lender can only share this information if the borrower gives their permission. Such permission always forms part of any credit agreement that the borrower must sign.

Lenders who want access to a person's credit file must be a member of a scheme called CAIS (Credit Account Information Sharing). This is strictly controlled and all information is subject to the Data Protection Act. This gives the borrower certain rights about knowing what information is held about them. Everyone has a right to see what a Credit Reference Agency has on file about them. And the information must be accurate. Credit Reference Agencies have a legal duty to correct any inaccurate information.

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