How do Credit Reference Agencies work?

Credit reference agencies, such as Experian, have come to play a significant role in most people s lives. We tend to interact with them at the point of applying for credit, whether that’s a mortgage or personal loans. However, while most of us have had some interaction with credit reference agencies at some point there is still quite a lot of misunderstanding about how they actually work. Why do credit reference agencies exist? According to the World Bank “credit reporting…allows lenders to evaluate the borrowing capacity of clients. And lets good borrowers benefit from more and cheaper lending.” Today, credit reference agencies have two main purposes: to help lenders make decisions that are fair, consistent and well informed and also to help prevent financial fraud. There are three agencies in the UK: Callcredit, Equifax and Experian. Who uses credit reference agencies? Banks, other lenders, building societies, mobile phone companies and retailers are some of the main organis
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