| By :
Jamie Simpson
A credit reference agency, or often called a credit bureau, is a company that gathers data about credit from different sources pertaining to consumers and then supplies this information for various uses, including bill paying and borrowing habits, court judgments and credit history. A lending company performs a process called a credit reference to determine what kind of repayment abilities someone has before they are given any type of credit. This type of credit reference service can be provided once joining a credit reference agency. If a consumer believes he or she has been turned down for credit unfairly, the lender can be used to explain why this particular decision was made. If turned down again, a request can be made of a credit reference file from any agency to find out what the problem is. Everyone is able to access his or her data that an agency is holding. A consumer has the right to write a letter to any one of the credit reference agencies asking for a copy of his or her file. All of this information is able to help lenders decide on someone's credit worthiness and the ability to pay back money. Banks, shops and other companies extend their credit by using this information. It can sometimes affect an interest rate and particular terms of a loan. A lender may only provide information with details of credit agreements and arrears if the customer has already been notified. This is usually agreement upon in a credit agreement beforehand. Equifax, Callcredit and Experian are the main credit reference agencies. When applying for credit or a loan, the lender will typically ask for one or even two of these companies for information. The 1974 Consumer Credit Act is what governs a credit reference agency's activities. The 1998 Data Protection Act also regulates these agencies. Section 7 of this act protects the interest of lenders as well as protects them from any losses. Credit reference agencies are 'bound' by this act in that they have to provide information that is relevant, accurate, kept for a proper purpose and not expired. Every consumer has to earn the right to credit; it is just not given out. Before providing anyone with credit, lenders want to be sure of a consumer's ability to repay the money that is lent. To determine this, they often look at information that is held by credit reference companies.
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