I have often been asked about the various UK credit reporting services, which one to use and which is best. The answer depends partly on your requirements, so there follows an explanation of the different types of credit agencies, and a list of all the main UK credit reporting services.
Types of credit agencies
The first point to understand is that there are two types of credit reporting service: credit data controllers, and credit data distributors.
Credit data controllers are the large agencies that buy public record data in bulk and have data sharing agreements with other companies. These agencies capture the data and maintain a database. They may also sell the data to other credit reporting agencies who act as distributors.
Credit data distributors represent the majority of credit reporting services. They are sometimes called third-party distributors. These companies buy the prepared data in bulk from the data controllers. They have essentially the same data, but without the overhead of maintaining it.
There was a time when data controllers jealously guarded their data and used it solely for their own credit reports. The biggest agencies were also reluctant to have their brand associated with other companies.
However this has changed and the large agencies now accept that other companies may be more effective and reaching and meeting the needs of other markets such as the SME market. This has opened the way for the large agencies to work with quite a few third-party distributors. However, just as there are differences between the large agencies, not all small agencies are the same either.
How the credit agencies compare
In terms of the quality of the service both the data controllers and some of the data distributors provide very good reports. But there are some factors which may influence your choice.
Price. The larger agencies which handle the data in bulk tend to be more expensive. This is partly because they can leverage the strength of their brand, and also because they have a larger infrastructure, and the high overheads of managing and controlling the data. The third-party distributors do not have the same overheads and may provide credit reports with essentially the same data but at less cost.
Reports. Each of the main agencies has their own report format and which is best is really a matter of personal preference. Some of the third-party distributors simply resell the reports of their data provider, but some take the data provider’s data and then create their own reports enhanced with additional data or analysis.
Knowledge. Here there can be a difference in standards. With the large data providers there will undoubtedly be people in the organization that understand the data and the ratings. With the smaller third-party distributors there are some that just resell the reports but with little understanding of credit risk analysis, and others that are well established and have a reputation for experience and knowledge in their own right.
Specialization. Among the large agencies some diversification is normal. In order to recoup the massive cost of maintaining the database, the large agencies try to repackage the data into other products, chiefly marketing data. However with smaller credit reporting services, diversification can indicate that the company just resells reports and does not have any specific expertise in credit risk analysis because credit status reporting is not the core business. In this case I would decide whether my priority is the actual credit reports, or the convenience of using the same company for a range of other services too.
Which agency to use?
The large agencies are often favoured by the major banks and blue chip companies, although some of these may use two or more credit reporting services. Smaller agencies may be stronger in a niche market such asTop Servicewhich provides reports for the construction industry.
The large agencies have their own credit risk models which provide the credit ratings used in their reports. The rating given to a company by each credit agency can be different because each agency has its own model. However most models will generally agree in the case of the highest risk companies.
The reports provided by the smaller agencies usually include the credit rating provided by whichever large agency provides their source data. Of the smaller agenciesFirst Reportis one that has the expertise to have developed its own credit rating model.
If I had a large budget I may use one of the large agencies and would choose based on my experience with their credit ratings, data accuracy, the speed of updating information, and report layout. If I had a smaller budget or wanted a more personal service and advice then I would use an established smaller agency where credit reports is the core business.
I have compiled a list of UK credit reporting companies, and a few services which provide credit reports along with other services.
Providers ofUK credit reporting services
Large data controllers
Companies that purchase bulk data and maintain commercial and consumer credit databases