Credit Reference Agencies

Abstract

Since the earliest times lenders have realized that if an individual had a poor credit history with one lender, then there was a good chance they would default on loans taken out with another. The converse was also true. Those with a good history of repayment tended to be good customers again in the future. It therefore made sense for lenders to follow a ‘you show me yours and I’ll show you mine’ policy of sharing information about the repayment behaviour of their customers. In many markets the idea of sharing information with competitors is considered a rather unwise thing to do. However, the accepted wisdom within the credit industry is that the benefits of obtaining customer information from many other lenders far outweighs any loss that might result from sharing information about your own.