Credit Reference Agencies

Abstract

The information solicited from an individual when applying for credit can on its own provide a reasonable assessment of the likelihood that they will default on the credit they are applying for. However, what this information does not provide are details of other borrowing, previous bankruptcies, cases of default and so on. Since the earliest times, lenders realized that if an individual had a previous record of default with one lender, there was a good chance they would default on future loans taken out with another. The converse was also true. Those who repaid loans in the past, tended to be good customers in the future. It therefore made sense to follow a ‘you show me yours and I’ll show you mine’ policy, and to share information with other lenders about the previous repayment behaviour of their customers.