The UK’s three largest credit reference agencies (CRAs) have collaborated on a new guide to help people understand how their credit-related information is used by lenders.

Equifax, Experian and TransUnion have launched the guide – Understanding your credit information and how lenders use it – to inform people about the factors lenders consider when deciding whether to accept an application.

The guide also explains what happens to people’s information after an account has been opened and a person’s rights if the application is refused.

It highlights the importance of regularly checking your credit report and score, as well as sharing the steps a consumer should take if they’re the victim of identity fraud.

Additionally, it outlines the different types of credit-related information and who can use it for what purposes, while explaining people’s rights and what they can expect from the organisations that use their information.

Lisa Hardstaff, Head of Consumer Experience and Communications at Equifax, said “Access to credit, be it a loan, mobile phone contract or a mortgage is something most of us will need at some point in our lives. We believe it is key that our customers understand their Equifax credit report and score and the factors that influence them. The document the three CRAs have created will help anyone wishing to understand how their credit information is used by CRAs, lenders and other companies that have access to their credit data. We hope that this document and the other educational information the CRAs make available to UK consumers will enable them to live their financial best and provide useful guidance to take whatever steps they need so that they are credit ready in the future.”

James Jones, Head of Consumer Affairs at Experian, said “Experian’s long-running public-education programme was set up to help people understand the role credit reference agencies play, how their credit information is used, and what their rights are. While we have made progress, including tackling some of the common misunderstandings, we know there is still work to do. This is why we have joined forces with the other main credit reference agencies to help create and launch this new comprehensive credit information guide.  We hope it will inform and empower many people.”

Kelli Fielding, Managing Director of Consumer Interactive at TransUnion in the UK said:“Credit plays an important role in our lives, from enabling everyday finance to helping people make some of life’s major purchases. Despite this, we know there’s a lack of understanding about credit reports and scores, so TransUnion is pleased to have partnered with the UK’s other leading credit reference agencies to create this detailed reference tool. We’re confident this new guide will help consumers learn more about their credit information and how it’s used by finance providers, encouraging them to take control of their credit profile to help them achieve their financial goals.”

Common misnomers about credit-related information are also tackled in the guide.

Top five credit myths… and the truth:

  1. There’s a credit blacklist: There is no such thing. Credit reports are factual and mostly positive.
  2. Previous occupants affect your score: Credit checks are on people, not addresses.
  3. Credit refusal damages your score: Lenders do not tell credit reference agencies whether you have been accepted or refused credit. The outcome isn’t shown on your report, just the fact you applied.
  4. Credit reference agencies decide who gets credit: Credit reference agencies inform decisions by providing some of the information lenders use, but only the lender can decide which customers to accept and refuse.
  5. Checking your credit report harms your score: You can do this as often as you like with no impact.