Credit reference agencies (CRAs) are critical for financial institutions and their customers, as they collect and maintain information about individuals' credit histories, as well as other relevant data such as business credit histories. The information is used to create credit reports, which provide a snapshot of creditworthiness and financial history, as well as relevant information about business activities. Credit reports typically include information such as credit accounts, outstanding debts, payment history, credit utilisation, and other relevant data.
CRAs provide credit reports to lenders and other authorised parties, including corporate and institutional customers, to help them make informed credit decisions. By providing information about an individual or businesses' credit history, credit reference agencies help lenders assess creditworthiness and manage risk. For example, a lender may use a credit report to determine whether to approve a loan application, set the terms of a loan, or monitor the creditworthiness of an existing borrower.
In the UK, there are three main credit reference agencies: Experian, Equifax, and TransUnion (formerly known as Callcredit). Each of these CRAs has slightly different ways of collecting and presenting information. Additionally, CRAs offer various services to help financial institutions manage credit risk, such as credit monitoring and risk management tools.
Credit reference agencies (CRAs) collect and maintain information about businesses in addition to individuals' credit histories. The information provided by CRAs about corporate entities can include:
- Credit accounts and outstanding debts
- Payment history and credit utilisation
- Legal filings, such as bankruptcies, judgments, and liens
- Business registration information and ownership details
- Industry and business classification codes
- Financial data, such as revenue and number of employees
- Trade references and credit scores
All of this information is used to create a credit report that provides a snapshot of a business's creditworthiness and financial history. Corporate and institutional customers can use this information to make informed credit decisions, such as whether to approve a loan application or set the terms of a loan. In addition, CRAs may offer various services to help corporate and institutional customers manage credit risk, such as credit monitoring and risk management tools.
Overall, credit reference agencies are an important resource for risk management, providing a comprehensive picture of credit history and helping lenders make informed credit decisions for both individuals and corporate entities.
In recent years digital solutions, such as FullCircl, leverage CRA data as well as information sourced from other official sources to provide automated onboarding, Anti-money Laundering (AML) and know-your-customer (KYC) / know-your-business (KYB) to financial institutions. Visit fullcircl.com to find out more.