Credit reference agencies use credit reference data in products and services that they offer to their clients. The purposes for which those products and services are used are described below, but please note that different clients may use the products and services in different ways. Consumers should check the privacy policies of the organisations that they deal with for details about how they use any products and services provided by the credit reference agencies.

(a)  Credit reporting and affordability checks

Each credit reference agency uses credit reference data to provide credit reporting services and affordability checks to its clients.

Credit reporting

Organisations use credit reporting services to see how people and businesses are managing payments in respect of their credit arrangements and how they have done so in the past. For example, if a person applies for a bank loan to buy a car, the bank may use credit reporting services to check whether that person has defaulted on any previous credit agreements. It will then use this information, together with information from other sources, to assess the risk of offering the loan.

Affordability checks

Organisations use affordability checks to help understand whether people or businesses applying for credit are likely to be able to afford the repayments. The information provided as part of the affordability checks may affect a person’s or business’s ability to obtain credit.

These activities help promote responsible lending, prevent people and businesses from getting into more debt than they can afford, and reduce the amount of unrecoverable debt and insolvencies.

(b)  Checks to validate and verify data, and help prevent and detect fraud, money laundering and other criminal activity

The credit reference agencies use credit reference data to provide validation and verification services and other services to help prevent fraud, money laundering and other criminal activity.

Some examples of how credit reference agency clients use these services are as follows:

1. When a person applies to an organisation for a product or service, the organisation might ask that person to answer questions about themselves, and then check the answers against the data held by the credit reference agencies to see if they match. For example, they may ask “What is your current address?” If the address provided does not exist on the credit reference agencies’ records (for example, because it is a fictitious address) or does not match the data held by the credit reference agencies (for example, there is no record of the person at the address provided), then this may be an indicator of a mistake or fraud.
2. Where some products and services are only available to people of a certain age, organisations may check whether the person they are dealing with is eligible by looking at data held by the credit reference agencies. For example, if a person is signing up to join a gambling website which is only for people who are at least 18 years old, the organisation may check to see if the age provided by the person matches that held by the credit reference agencies.
3. Government and quasi-government bodies may use credit reference agency services to check whether people are entitled to certain benefits and to help recover unpaid taxes, overpaid benefits and similar debts. For example, if a person is claiming single person discount for council tax, a local authority may check with the credit reference agencies to see if any other adults are living at the same address.
4. The police may use data held by credit reference agencies to help in their investigations into criminal activity.

An indication of invalid or unverified information, fraud, money laundering or other criminal activity may affect the outcome of an application for (amongst other things) a product or service, a tenancy agreement or employment. If clients using the services identify potentially fraudulent activity they may also pass the applicant’s details to a fraud prevention agency such as Cifas and/or to the police.

(c)  Customer management

Credit reference agencies use credit reference data to provide products and services for organisations to use for customer management purposes. Customer management is the ongoing maintenance of an organisation’s relationship with its customers. This could include activities designed to support:

• data accuracy: for example, to correct or update data held on the organisation’s records, such as correcting spelling mistakes or adding missing fields;
• ongoing relationship and account management activities: for example, to help organisations make decisions relating to credit limit adjustments, transaction authorisations, card reissue, inbound lending requests, and to identify and manage the accounts of customers including those at risk, in early stress, in arrears, or going through a debt collection process.

(d) Tracing and debt recovery

Credit reference agencies use credit reference data to provide products and services that allow organisations to trace people. This is typically needed where a person has moved address or changed their telephone number and has not provided their new contact details. The credit reference agencies help organisations locate customers they have lost contact with by providing them with updated addresses and other contact details.

The products and services are used to support organisations’ debt recovery and debtor tracing activity. For example, if a person owes money to an organisation and moves to a new house without telling the organisation where they have moved to, the organisation may use these services to help find that person to recover the money that is owed to them.

These products and services are also used to find people in order to let them know about assets that they may have forgotten about or not be aware of, such as old dormant savings accounts or pension funds, or to find people to let them know about assets of a deceased person which they have an interest in, such as administrators or beneficiaries of a deceased person’s estate.

Please also see section 2(h) below which describes how some of the credit reference agencies provide tracing services for marketing purposes.

(e)  Tenant vetting

Credit reference agencies use credit reference data to provide products and services that allow landlords to verify some of the information provided by their prospective tenants, as well as confirming that they are who they say they are and that they are likely to be willing and able to pay their rent on time. Landlords can use this information to help decide whether to agree to the tenancy, or how much of a deposit they should ask for.

(f)  Staff and job candidate vetting

Credit reference agencies use credit reference data to provide products and services that allow organisations to verify some of the information provided by their staff and job candidates and confirm that they are who they say they are. They also enable employers to assess whether the staff member or candidate has a history of managing their own financial commitments well, or whether they are financially compromised. This can be used to help them decide whether the person would be or will continue to be a suitable member of staff.

(g) Insurance risk assessments and pricing

Credit reference agencies use credit reference data to provide products and services for organisations to use to assess insurance risk. For example, an insurer may find that a person’s financial standing and history can be used to help predict how likely that person is to make a claim on an insurance policy, or how large that claim might be. This can help the insurer to decide (i) whether to provide insurance to a person, and (ii) how much the insurance premium should be, and (iii) whether to allow payment for insurance on a credit instalment basis.

(h) Marketing and marketing-related services

Overview

Each credit reference agency offers its clients marketing services. Some of these marketing services use credit reference data and some do not. For details about the marketing services offered and the personal data used by the credit reference agencies, please see the following links:

Experian:               https://www.experian.co.uk/privacy/consumer-information-portal

Equifax:                https://www.equifax.co.uk/ein.html

TransUnion:         https://www.transunion.co.uk/legal/privacy-centre?#pc-marketing-services

As well as other rights, consumers have the right to object to the processing of their credit reference data for direct marketing purposes, including any profiling that is related to direct marketing. Section 11 sets out more details on how this right can be exercised.

If a credit reference agency provides marketing services, then they may use an individual’s title, name (including aliases), address, date of birth, gender and address links information (see section 4 for more detail), as well as limited information relating to their financial standing.

Screening out

Credit reference agencies use credit reference data to provide screening services to their clients. This means that they identify people who clients may wish to screen out of marketing lists. Screening is used to help ensure that individuals do not receive irrelevant or inappropriate marketing information.

For example, a client may want to screen out from its marketing list someone who is deceased, or who is under 18, or does not reside at the address they hold, or who may not be interested in a product or service or is unlikely to be accepted for it.

Other marketing-related activities

In addition, credit reference agencies may use credit reference data to offer some or all of the following marketing services:

• They may supply the open version of the electoral register (where people have not opted out from their electoral register data being used for marketing and other purposes) to organisations for marketing purposes. This can include identifying new potential customers, verifying that names, addresses and dates of birth collected from other sources are accurate and complete, and informing customers of any errors.
• They may identify when someone has moved away from an address so that marketing is not sent to them at that old address.
• They may help build insight using profiling techniques which will be used by organisations to help them identify people that they want to communicate with about particular products and This insight might predict, for example, age, marital status, household composition, length of residency at an address and gender. It can help give organisations insight into the likely characteristics of the UK population at an individual, household and postcode level. Credit reference data also helps credit reference agencies to validate the insight being created.
• In certain circumstances, insight might also be used to help clients predict the financial profile of a person so that they can personalise their interactions with them and make communications more relevant and For example, they could use the insight to select products or offers that they believe would be relevant to that person.
• Models and insight created by the credit reference agencies can be matched to clients’ own contact lists so that they can make better informed decisions about how they interact with
• They may confirm whether individuals are resident at the address that the credit reference agencies or their clients hold for This can be done by checking the credit reference data to see if there are any open credit accounts at an address and whether the accounts have recent activity, such as where a recent payment has been made. If they do, then it is likely that they have the correct address details. This will help ensure that an individual does not receive marketing for someone else and the credit reference agencies’ clients do not send marketing to the wrong address.
• They may trace individuals to a new address so that their marketing preferences (both opt- ins and opt-outs) collected at a previous address can continue to apply at their new address and so that marketing is not sent to them at their old address.
• The credit reference agencies may also use credit reference data to help keep their own marketing suppression lists (or those of their group companies) accurate and up to For example, if you have previously asked to be excluded from marketing activity and your credit reference data indicates that you have since moved or changed your name, that information can be used to make sure that you continue to be excluded from marketing activity at your new address or under your new name.

(i) Profiling, statistical analysis and anonymisation

Credit reference agencies use, and allow their clients to use, credit reference data to carry out profiling of consumers through statistical analysis. This includes the creation, validation and use of scorecards, models, and attributes in connection with the assessment of risks relating to credit, fraud, affordability and debt collection. It is also used in verifying identities, to monitor and predict market trends and to enable clients to refine lending and fraud strategies, and loss forecasting.

These practices profile consumers to help determine the likelihood that a consumer with certain characteristics will act in a way that will produce certain outcomes; for example, to repay credit, to be able to afford credit, to claim on an insurance policy, to commit fraud, to respond to certain collection strategies or to become insolvent.

The credit reference agencies may also convert personal data into statistical or aggregated form so that individuals are not identified or identifiable (thereby creating anonymized data). Anonymized data is not personal data and the credit reference agencies may use such data to conduct research and analysis, including to produce statistical research and reports or for any other purposes.

(j) Data management activities

Credit reference agencies use credit reference data to carry out certain processing activities to support their own business operations. This includes supporting the effectiveness, efficiency and security of their databases, products and services, both in the context of their credit reference activities and more widely. For example:

• Data loading: credit reference data is checked for integrity, validity, consistency, quality and age to help make sure it is accurate. These checks pick up issues such as irregular dates of birth, names, addresses, account start and default dates, and gaps in status history.
• Data matching: credit reference data is matched to the credit reference agencies’ existing databases to help make sure it is assigned to the right person, even when there are discrepancies like spelling mistakes or previous names or different versions of a person’s name. Credit reference agencies use credit reference data to create and confirm identities, which they use to underpin the services that they provide.
• Data linking: when credit reference agencies compile data into their databases, they create links between different pieces of data. For example, people who appear financially associated with each other may be linked together and a person can be linked with their previous and current addresses. Also, where someone has an alias, such as a maiden name and married name, these names will be linked.
• System maintenance and testing: credit reference data may be used when carrying out system maintenance, repair and testing, and security activity.

Each credit reference agency has its own processes and standards for data management activity.

(k) New development and testing

The credit reference agencies use credit reference data to help develop new products, services and technologies and to test them. Typically, credit reference agencies will anonymise credit reference data before it is used for these purposes.

(l) Compliance with laws

The credit reference agencies use and disclose credit reference data where required by law. For example, this can happen in response to a court order or a request from a regulator, or in order to comply with a request from a person (or by a third party acting on their behalf), to exercise their legal rights in respect of the credit reference data, such as by requesting a copy of it.

This section helps consumers understand how to exercise their data protection rights to object to credit reference data being used by the credit reference agencies and how to ask for it to be deleted. To understand these rights and how they apply to the processing of credit reference data, it is important to know that the credit reference agencies hold and process personal information in credit reference data under the “legitimate interests” basis for processing (see section 3 above for more information about this), and do not rely on consent.

Consumers have the right to object to the processing of credit reference data by a credit reference agency. This can be done by contacting the relevant credit reference agency using the contact details in section 1 above.

Although consumers have complete freedom to contact a credit reference agency with objections at any time, under data protection law, a consumer’s right to object does not automatically lead to a requirement for processing to stop, or for personal data to be deleted.

Because of the importance of the credit referencing industry to the UK’s financial system, and the important purposes for which the credit reference data is needed (such as supporting responsible lending, and preventing over-indebtedness, fraud and money laundering) it will be rare that the credit reference agencies do not have compelling, overriding grounds to carry on using the personal data following an objection. In many cases, it will not be appropriate for the credit reference agencies to restrict or to stop processing or delete credit reference data, for example, where the result would be to hide a poor credit history that could enable a person or organisation to get credit they otherwise would not be eligible for.

However, as an exception from the general rule described above, all consumers have an absolute right to object to their personal data being used for direct marketing purposes. If you object to a credit reference agency using your personal data for those purposes, you can get them to stop by contacting them using the details in section 1.