How do credit check bureaus work?
Credit check bureaus (otherwise known as credit reference agencies) are an integral part of the process when you are applying for a mortgage, loan or credit card (but not for a payday loan) as they carry out credit checks on behalf of lenders in order to determine whether your application should be accepted or declined. Here is our guide to how credit check bureaus work and what it means for you.
How does a credit check work?
Credit checks these days are carried out almost instantaneously by credit check bureaus the minute you have made an application for credit. This is partly due to the fact a large majority of lenders have integrated credit checks directly into their system in order to make the process far more efficient.
Credit checks are carried out on a number of different things, such as :
- Credit cards
- Store cards
- Payday loans
- Secured loans
- Mobile phone contracts
Who are credit check bureaus?
There are three main credit check bureaus in the UK that are used by lenders in order to determine whether you should be accepted for credit. These are:
But why do lenders ask credit check bureaus to carry out this work? As previously mentioned, it is largely to do with ensuring that the process is speedy and efficient. Otherwise, if lenders had to collect information when it comes to loan, mortgage or credit card applications it is extremely likely that it would take far longer to determine your eligibility. Credit check bureaus carrying out this work is also safer, as if the process was the responsibility of lenders, who do not have the systems in place to be able to quickly accept or decline an application it could mean that they would be more tempted to approve an application of credit without having all the necessary information.
Can I access my credit report?
Retrieving your credit report is incredibly easy to do, this information isn’t just available to lenders! You can contact any of the three credit check bureaus online, by phone, or by post to get access to your credit file. Depending on the company, you can receive this a basic report for free, or for as little as £2 for a Statutory Report.
What information do credit check bureaus provide?
The information the three credit reference agencies will provide is usually the following details:
- Your full name
- Date of birth
- Your current address as well as previous addresses you have lived at. This information is obtained through the electoral register
- Your credit search footprint. This means that any previous applications you have made Any joint bank accounts for mortgages you have open with relatives, friends or a spouse
- Your current account overdraft
- Any existing loans, credit card or mortgage accounts you have open
- Any outstanding debt you have
- Any missed repayments on your accounts. This will also detail how many times they have been missed
- Accounts closed in the past six years
- If you are bankrupt or if you have any County Court Judgements (CCJs)
The benefits of credit check bureaus
We’ve already stated some of the advantages of credit check bureaus and the work they do, in terms of helping the loan application process to be much more efficient for companies. For you, obtaining your credit report from a credit check bureau also has these advantages too:
- It can alert you to any fraudulent actions on your account
- It can also help to provide you with some clarity as to why you haven’t been accepted for previous loan applications. This is usually related to your credit score, and so it gives you the opportunity to see where you need to improve