Credit Reference Agencies, History, Record, Scoring, Rating. What is the difference?
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1All these terms are used regularly and refer to different aspects of credit.
2‘Credit Agencies’ collect credit information about you from lenders. Potential lenders then use that information to assess your credit worthiness.
3A ‘Credit History’ is a record of how you’ve managed credit in the past, using information from credit lenders and other sources. This is also known as your ‘Credit Record’.
4Credit Reference Agencies often provide services to the public where they let you see your credit history. It’s common to see a ‘credit score’ given but this is simply an expression of their opinion about how appealing they believe you may be to a potential lender.
Credit Agencies, such as Experian and Equifax, receive data on a monthly basis from credit card issuers, loan and mortgage companies, mobile phone companies and catalogue companies about how you are managing your credit accounts. The key information is whether monthly repayments are made on time and whether borrowings are within their credit limits. When you sign a Credit Agreement, you usually give the credit issuer permission to share data about how you manage your credit account with the Credit Agencies every month.
Your Credit Record is sometimes called your Credit History. It is a summary of whether you’ve been making your monthly repayments on time and staying within your credit limits. This information covers all kinds of repayments and accounts: credit cards, loans, mortgages, mobile phones and catalogues. It can date back 42 days, 6 months, 12 months or longer.
Your Credit Record also includes any County Court Judgements (CCJs) that stay on your history for 6 years.
Credit Scoring is sometimes called Credit Rating. There are typically two different types of credit scores:
Credit Agency Credit Score
The Credit Agencies will review your circumstances and credit history and make their own assessment of your ability to manage a credit account and repay a loan. This is often a general assessment of your ability to manage credit, rather than a specific assessment for a certain type of credit product. They will summarise this into a numerical score, often between 1 and 1000. The higher the number, the better your credit score.
Credit Issuer Credit Score
Issuers of credit, such as credit card, loan and mortgage companies, will review the information you provide on your credit application as well as the information in your Credit History and assess your ability to manage the credit account for which you applied. For instance, a catalogue company may provide you with a very different credit score than a mortgage company. When you apply for a credit account and sign the terms and conditions, you usually provide the credit issuer with permission to access your Credit History with the Credit Agency.