Credit Checks Explained
When requesting to switch to a new supplier, they may run a credit check on you to ensure that you are on the most suitable plan. For example it is relevant to run a credit check for pay monthly plans given that you are using the gas and/or electricity in advance of actually paying for it.
Below gives the details of how you can expect a supplier to use your data for credit checks. If you have any further questions, or are unsure about anything, you should speak directly with your supplier to find out more.
Scroll to the bottom of this guide for explanations of any definitions that you might be unsure of.
What might energy suppliers do?
1. When you join a supplier, they may:
a) Check their own records for information on:
i) Your personal account
ii) Your financial associates’¹ personal accounts (if you have one)
iii) If you’re an owner, director or partner of a small business², they might also check your business accounts
b) Search credit reference agencies for information on:
i) Your personal accounts
ii) If you’re making a joint application or have done the following things, they may check your financial associates’ personal accounts too:
iii) If you’re an owner, director or partner of a small business, they might also check your business accounts:
- Previously made joint applications
- Have joint account(s)
- Are financially linked³
iii) Very occasionally, if they don’t have enough info on you, they might also use information about other members of your family
iv) If you’re a director or partner in a small business, they may also check on your business accounts
c) Search fraud prevention agencies for information about you and any addresses you’ve lived or had your business in (if you have one)
2. When you ask to join a supplier, this is what they might do with the info you give them:
a) They may send it to the credit reference agencies
b) If you’re planning to have two or more people on your account or you tell them that you have a spouse or financial associate, they may:
i) Search, link and/or record information about you both from credit reference agencies
ii) Link any individual identified as your financial associate, in their own records
iii) Take both your and their information into account in future applications by either or both of you
iv) Continue this linking until the account closes, or is changed to a sole account and one of you tells them that you’re no longer linked
So you must make sure that the other person is happy about you disclosing information about them.
c) If you give them false or inaccurate information and they suspect or identify fraud, they may record this and may also pass this information to fraud prevention agencies and other organisations involved in crime and fraud prevention.
d) Your data may also be used by them to offer you other products.
3. With your information, they may:
a) Assess this request for credit
b) Check details on applications for credit and credit-related or other facilities
c) Verify your identity and the identity of your spouse, partner or other directors/partners
d) Carry out checks for the prevention and detection of crime, fraud and/or money laundering
e) Use scoring methods to assess this request and to verify your identity
f) Manage your personal and/or business account (if you have one) with them
g) Do periodic statistical analysis or testing to make sure the accuracy of existing and future products and services, and any or all of these processes may be automated
4. What they might do when you already have an account with the supplier:
a) Where you have an account with them or you’re trying to sign up, they may give details of your personal and/or business account (if you have one), including names and parties to the account and how you manage it/them to credit reference agencies
b) If you have an account with them and don’t repay in full and on time, they may tell credit reference agencies
c) They might make periodic searches of their own group records and at credit reference agencies to manage your account with them, including whether to make credit available or to carry on extending existing credit. They may do this by using an automatic scoring system, which uses information you’ve given them, any information they hold about you and information at credit reference agencies. They may also check at fraud prevention agencies to prevent or detect fraud.
d) If you don’t make payments you owe them, they may trace your whereabouts and recover debts
What do credit reference and fraud prevention agencies do?
5. When credit reference agencies get a search from the supplier they’ll:
a) Place a search ‘footprint’ on your credit file whether or not this application goes ahead. If the search was for a credit application, the record of that search (but not the name of the organisation that did it) may be seen by other organisations when you apply for credit in the future.
b) Link together the records of you and anyone you’ve told them is your financial associate, including previous and subsequent names of parties to the account. Links between financial associates will stay on your and their files until you or your partner successfully files for a disassociation4 with the credit reference agencies.
6. They’ll then supply them with:
a) Credit information, such as previous applications and the way you’ve managed accounts in your name and of your associate(s) (if there is a link between you – see 1b above) and/or your business accounts (if you have one)
b) Public information, such as County Court Judgments (CCJs) and bankruptcies
c) Electoral Register information
d) Fraud prevention information
7. When information is supplied by your energy supplier, to them, on your account(s):
a) Credit reference agencies will record the details that are supplied on your personal and/or business account (if you have one), including any previous and subsequent names that have been used by the account holders and how you/they manage it/them
b) If you borrow and don’t repay in full and on time, credit reference agencies will record the outstanding debt
c) Records shared with credit reference agencies remain on file for six years after they are closed, whether settled by you or defaulted
8. How your data will NOT be used by credit reference agencies:
a) It will not be used to create a blacklist
b) It will not be used by the credit reference agency to make a decision
9. How your data WILL be used by credit reference agencies:
a) The information that suppliers and other organisations give to the credit reference agencies about you, your financial associates and your business (if you have one) may be supplied by credit reference agencies to other organisations and used by them to:
i) Prevent crime, fraud and money laundering by, for example, checking details provided on applications for credit and credit related or other facilities
ii) Check the operation of credit and credit-related accounts
iii) Verify your identity if you or your financial associate applies for other facilities
iv) Make decisions on credit and credit-related services about you, your partner, other members of your household or your business
v) Manage your personal, your partner’s and/or business (if you have one) credit or credit-related account or other facilities.
vi) Trace your whereabouts and recover debts that you owe
vii) Do statistical analysis and system testing
10. How your data may be used by fraud prevention agencies:
a) The information that suppliers provide to the fraud prevention agencies about you, your financial associates and your business (if you have one) may be supplied by fraud prevention agencies to other organisations and used by them and us to:
i) prevent crime, fraud and money laundering by, for example:
(1) Checking details provided on applications for credit and credit related or other facilities
(2) Managing credit and credit-related accounts or facilities
(3) Cross checking details given on proposals and claims for all types of insurance
(4) Checking details on applications for jobs or when checked as part of employment
b) Verify your identity if you or your financial associate applies for other facilities, including all types of insurance proposals and claims.
c) Trace your whereabouts and recover debts that you owe
d) Carry out other checks to prevent or detect fraud
e) Do statistical analysis and system testing
11. Suppliers and other organisations may access and use, from other countries, the information recorded by fraud prevention agencies
12. Your data may also be used for other purposes for which you give your specific permission or, in very limited circumstances, when required by law or where permitted under the terms of the Data Protection Act 1998
13. Your data might also be used by suppliers to offer you other products, but only where permitted
Want to learn more about credit checking?
What is a credit reference agency?
Credit reference agencies (CRAs) collect and maintain information on consumers’ and businesses’ credit behaviour, on behalf of organisations in the UK.
What is a fraud prevention agency?
Fraud prevention agencies (FPAs) collect, maintain and share information on known and suspected fraudulent activity. Some CRAs also act as FPAs.
Why do suppliers use them when I’ve asked to transfer to a new supplier?
Although you’ve asked to transfer your supply and they’ll check our own records, they’ll also contact CRAs to get information on your credit behaviour with other organisations. This’ll help them make the best possible assessment of your overall situation before they make a decision.
Where do they get the information?
It’s publicly available information from:
- The Electoral Register from Local Authorities
- County Court Judgments from Registry Trust
- Bankruptcy (and other similar orders) from the Insolvency Service
- Fraud information may also come from fraud prevention agencies
- Credit information comes from information on applications to banks, building societies, credit card companies etc, and also from the conduct of those accounts
How will I know if they’re going to send my information to a CRA or FPA?
They’ll tell you when you’re signing up if they’re going to give your info to a CRA or FPA.
They’ll also let you know if they plan to send information about you, such as payment history information on you and your business, if you have one, to CRAs. You can ask at any time the name of CRAs and FPAs.
Why is my data used in this way?
Suppliers and other organisations want to make the best possible decisions they can in order to make sure that you, or your business, will be able to repay them.
Some organisations might also use the information to check your identity to help everyone make responsible decisions.
They also want to make decisions quickly and easily and, by using up-to-date information (provided electronically), they can make the most reliable and fair decisions possible.
Who controls what agencies are allowed to do with my data?
All organisations that collect and process personal data are regulated by the Data Protection Act 1998, overseen by the Information Commissioner’s Office. All credit reference agencies are in regular dialogue with the Commissioner. Use of the Electoral Register is controlled under the Representation of the People Act 2000.
Can just anyone look at my data held at credit reference agencies?
No. Access to your information is very strictly controlled and only those entitled to do so may see it. Usually, that’ll only be with your agreement or (very occasionally) if there is a legal requirement.
Find out more
Get in touch with the CRAs in the UK. Each of them might have different information, so it’s worth contacting them all. They’ll charge you a small statutory fee.
Consumer Services Team PO Box 491
Phone: 0870 0601414
Credit File Advice Centre
PO Box 3001
Phone: 0870 010 0583
Consumer Help Service
PO Box 8000
Phone: 0870 241 6212
¹A financial associate will be someone with whom you have a personal relationship that creates a joint financial unit in a similar way to a married couple. You’ll have been living at the same address at the time. It’s not intended to include temporary arrangements, such as students or rented flat sharers or business relationships.
²A small business is defined as an organisation which might be sole trader, partnership or a limited company that has three or less partners or directors.
³Credit reference agencies may link together the records of people that are part of a financial unit. They may do this when people are known to be linked, such as being married or have jointly applied for credit or have joint accounts. They may also link people together if they, themselves, state that they are financially linked.
4Financial associates (see 1 a) iii) may ‘break the link’ between them if their circumstances change such that they are no longer a financial unit. They should apply for their credit file from a credit reference agency and file for a ‘disassociation’.
Reading your bill . . .