Credit reference agencies hold information about you which is shared with lenders. This information can be checked when a company is deciding whether to give you credit.
A creditor may check with any of the three main credit reference agencies and find out your history of payments on other debts. They will be looking for information such as your payment history over the last 12 months, if you have any default notices, or a record of court action or bankruptcy. This helps the potential creditor to decide how safe it is to lend money to you. If you have a poor credit history, you may be charged higher rates of interest or refused credit altogether.
The creditor will also check your application details such as your address and date of birth to make sure they match with the information on your credit file. Information such as your salary, criminal record or medical history is not on your credit file.
Even if they are not offering credit, companies often check the credit files of new customers to confirm identity and prevent fraud.
The three main credit reference agencies in the UK are Experian, Equifax, and Call Credit.
The details held by each of these may be different as not all creditors share details with all three.
In addition to these, many creditors share details with a separate fraud-prevention services called National Hunter Ltd and CIFAS.