Page 1: Introduction
Experian operates the UK's largest Credit Reference Agency (CRA). There are three in the UK. Banks and credit card companies share information about their customers' credit accounts with each other through the CRAs. They then use this information to help them quickly make lending decisions. The lender decides whether someone is likely to, and can afford to, repay any borrowings by looking at how much credit they already have and how they are managing this. Lenders pay a fee to the CRA each time they search its records. Consumersgive permission for their information to be given to a CRA when they apply for credit.
CRAs also provide servicesand information directly to consumers. Consumers have a legal right to see information held about them by a CRA. They can also dispute information that they feel is inaccurate. Experian runs a consumer education programmeto help consumers understand how credit granting works and how individuals can look after their own credit histories. At some point in life, most people will use credit. It is very much part of modern living. Using credit means borrowing money which usually has to be paid back in instalments with interest. The interest rate charged on different credit products can be compared by checking the APR (annual percentage rate).
Young people may need to apply for credit to help finance their studies, to buy a car or their first home or perhaps to get help with other purchases. Student loans, hire purchaseagreements, mortgages, credit cards or store cards are all forms of credit. Adverts and offers for credit deals are almost everywhere we look, from television to high street billboards, at sporting events and on the Internet.
Lending someone money always involves a certain amount of risk. The risk is that the money won't be repaid. Lenders often calculate this risk using a system called credit scoring which is usually computerised. This system gives points to each piece of personal information provided by a consumer. This information might include details of your job and wages and whether you own your home or rent. The information held by the CRA on your credit report is also scored. If an application gains enough points the lender will usually offer credit. The lender decides the total number of points an application needs to reach for it to be successful. This will differ from one company to another and, sometimes, from product to product within the same company.
Consumers can check the information on their credit report at any time for a small fee (set by law). Credit reports include details about past and current credit agreements, as well as recent credit applications. CRAs also hold public record information, so your credit report shows whether you have any court judgments or bankruptcy orders and whether you are registered on the electoral roll.
Experian's CRA has changed dramatically in the last ten years. These changes have largely been prompted by a number of external influences. By carrying out a SLEPT analysis (SLEPT stands for social, legal, economic, political and technological), an organisation can produce a strategic plan to cope with, and in some cases take advantage of, external influences. Opportunities to develop new products and services and to improve existing ones can be identified using this kind of business analysis.
Some major recent external influences on Experian have been:
- changing attitudes to money and credit
- changes in legislation
- the boom in e-commerce
- the emergence of identity fraud.