Your credit score will make a big difference to your financial life. If you need to borrow money, such as with a mortgage or a short term loan, any lenders you apply to will look at your credit score. The score you have will make a big difference to whether they lend to you or not. As well as looking at your credit score, they’ll also look at your credit report. This forms the basis of your credit score but is more in depth, giving detailed information about your borrowing history and financial situation.
But who gets to decide what your credit score is and what your credit report says about you anyway? In this article, we’ll take a closer look at Equifax. This credit reference agency (CRA) is one of the big three CRAs in the UK. If you’re an adult in the UK, they probably keep information about you.
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- You can use Equifax to find out how to improve your credit score
- Businesses in the UK can also use Equifax to decide who to lend money to
This article about Equifax is the third in a series that looks at credit reference agencies in the UK. Equifax is one of two CRAs that Cashfloat uses to make decisions about potential customers. As a responsible lender, we’re careful to give customers the loans that work best for them. Equifax’s information helps us to get things right.
The information that Equifax keeps about people helps lenders to assess how well a potential customer is likely to handle debt. I.e. how likely they are to repay a loan if one is given to them. Firstly, the information Equifax provides helps lenders to decide whether they will lend to someone. If lenders decide they can lend to someone, it will then help them to decide how much they can lend and under what conditions. Other organisations, such as utility companies or insurers, may also look at your credit report.
Equifax has been providing this service since 1899 and has grown to become a very important institution in the world of credit reporting. As well as helping businesses make decisions, normal people can use Equifax to find out how to manage their money better and improve their credit score.
For general information about credit reports and scores look here.
What information do Equifax keep about people in the UK
Equifax provides details on people’s borrowing history as well as other personal and financial information.
They provide this to creditors, such as loan companies, and other organisations so they can get as accurate an idea as possible about how well someone is likely to handle debt. If you apply for credit, the organisation you apply to will look at your credit history. They’ll use the information they find to decide whether they think you’re likely to be a good borrower or not. This may sound intrusive, but it’s essential for lenders to make responsible decisions when they lend money to people.
To provide a brief summary, an Equifax credit report includes things such as:
- Information that is used to verify people’s identities.
- Information on credit accounts people have or have had in the past. This is used to show how responsible someone has been with money they’ve borrowed in the past. As well as this, it will show what their current debt situation is. This includes information such as credit limits and account balances. Occasions when someone has missed payments, made late payments or otherwise had trouble repaying debt are also recorded.
- Public records related to a person’s credit history such as bankruptcies, individual voluntary arrangements (IVAs) or county court judgements (CCJs). Depending on exactly what these records are, they can have quite a negative impact on a person’s credit score. The longer in the past they are and the better record a person has built up since they were made, the better.
- Hard enquiries that have been made into someone’s credit report because they applied for credit. This could be from an application for a payday loan or credit card, for example. When someone makes an application for credit, the organisation they apply to should request a copy of their credit record. This is known as making a ‘hard inquiry’. These stay on credit reports for two years and may affect a person’s credit score.
Equifax credit scores
As well as keeping detailed information on people’s credit histories, Equifax also gives people credit scores.
Equifax credit scores are given in a range of 0 to 1,000. The higher your score, the better. According to the exact number of a person’s credit score, it will be classified as either poor, fair, good, very good or excellent. You can read more about how Equifax’s credit scoring system works here.
Having a higher credit score is obviously better, but you don’t need to have an excellent credit score to get offers of credit. Lenders also only use credit scores from CRAs like Equifax as a reference point. They make decisions by themselves. One lender might not accept an application for credit where another one will. Cashfloat, for example, accepts applications from people with bad credit scores as long as they can prove they can afford to repay the money.
Some ways to boost your score are to register on the electoral roll, consistently make timely payments for your debts, limit the amount of credit that you use and make sure there’s no incorrect information on your credit report.
You can see your Equifax credit report
Normal people can see the information that Equifax keeps about them by signing up to myEquifax. You can see both your credit report and credit score. As well as simply finding out what Equifax knows about you, you can find ways to manage your finances better. The aim is to help people to take control of their credit score by finding out how it’s decided and what they can do to improve it.
On myEquifax, you get:
- Unlimited access to your Equifax credit report and score
- Alerts if your credit report changes significantly
As well as this, Equifax also provides services that help people protect their identity. They do this by alerting people if their details are found on websites used by fraudsters to trade personal information. You can also compare loans and credit cards and examine student finances in depth.
To help people manage their finances better, Equifax provides practical tips to help with everyday money management in their knowledge centre. This includes information on:
- Money management
- Identity protection
- Loans and credit
- Debt management
- Mortgages
- Money management for students
The information that Equifax provides is quite extensive, covering a wide range of matters. It’s also fairly in depth. It’s worth looking at their advice on things such as how much rent someone can afford, money saving strategies or even how you can budget for a baby.
Note that when you sign up to myEquifax, only the first 30 days of membership are free. After that, it costs £10.95 per month. If you don’t want to sign up to myEquifax, you can request a free copy of your statutory credit report.
Equifax provide information to UK businesses
Businesses that provide credit can use Equifax to gather information about people who are interested in their services. This includes lenders like Cashfloat offering short term loans, credit card companies and banks as well as businesses like utility companies and phone companies. Employers and landlords may also check people’s credit reports.
If they do, they’ll take a look at the information in your credit report, and they’ll look at the credit score that Equifax has given you. Credit providers use this information to make a judgement about whether they should lend money to someone or not. They may also use it to help decide how much to lend and under what conditions. If you have a higher credit score, you’ll likely be offered bigger loans with a lower interest rate, for example.
Equifax goes further than just providing credit reports and scores for the credit decisions we’ve mentioned so far. They also help businesses to manage their interactions with customers in a number of other ways. Read on to find out more.
Equifax UK – The four key business services
The key thing that Equifax does is provide credit scores and reports to businesses that provide credit to people. This is a unique service that credit reference agencies provide. However, Equifax also provides information and analytical services that businesses can use for marketing and managing customer relationships.
Businesses can use Equifax information to get insights on customers from before they even sign up right to when debts need to be repaid.
The four key things Equifax help UK businesses with are:
Banks, payday lenders and other credit providers can use Equifax for marketing and customer acquisition. Equifax offers a range of services and can help in many ways.
One interesting service they offer, as an example, is help identifying consumers who are likely to move home in the near future. Equifax provides this service because people who move house are more likely to switch to new service providers and make new purchases when they move. As such, they’re more likely to require the services of credit providers. Equifax states that these people will spend more money in the first six months following a move than they will in the next five years. Equifax’s information helps credit providers market their services to these people.
The next thing Equifax will help with is verifying customer identities and identifying which customers can be approved for credit. Obviously, providing credit scores and reports for credit approval assessments is the unique and most important service that CRAs provide.
Verifying customer identities can be important for many businesses. This may be connected to a business’ needs to meet regulatory and industry standards. As well as this, it also simply helps businesses make sure they’re not onboarding people who will end up being bad for business. That could be people like fraudsters or people who provide false address details.
Credit reports and credit scores are used by credit providers to make lending decisions that are responsible and that match their business interests. As we’ve discussed, credit history information such as a person’s borrowing history and credit score are useful when it comes to making a decision about how good a borrower a person is likely to be.
Customer relationship management is about continually reviewing customers’ situations and predicting how they will behave in the future. This allows a business to manage the way they approach people much more effectively. If a person’s behaviour or financial situation changes for the better or worse, a credit provider can see more clearly what they should do.
The services Equifax provide help companies to maximise customer value, retain customers, assess ongoing risk and financial stability, carry out behavioural modelling and comply with regulations.
Equifax also help with:
- Managing financial crime compliance
- Preventing payment fraud
Finally, Equifax can help companies get money from their customers.
Equifax helps to confirm the identities and residences of customers, and this allows creditors to target their collection efforts. As well as this, Equifax also provides a good amount of information into customers’ financial situations. This allows creditors to tailor their approach to match people’s circumstances. For example, Equifax provides information into people’s previous post payment default behaviour so that creditors know how they are likely to act with them.
Alternatively, Equifax can help identify which customers really can’t pay debts compared to those who are just unwilling. Again, this can be used to inform the approach that is taken to them and to make sure that creditors are being responsible.
What credit reference agency do Cashfloat use?
When Cashfloat checks someone’s credit score, we use Equifax and TransUnion. However, we don’t make a decision that is only based on the information they provide. As well as reviewing your credit report, we’ll also gather information from our application form to understand your whole financial picture. Having a bad credit score won’t necessarily deter us from giving you a loan. If you can prove that you can repay a loan despite having a bad credit score, you have a good chance of approval with Cashfloat.
