I have written blogs about credit referencing agencies, credit risk, where agencies get their data from as well as about the big filing cabinet aka Companies House. In this blog, I would like to explore the pros and cons of the various agencies.
So, first things first, not all agencies are equal and to give an example, I would ask you to consider virtual mobile network operators like say the large supermarkets. Sure, they have their own sim card and brand but, they don’t have network infrastructure as they need to “rent” that from one of the 4 UK Mobile networks.
It’s the same with some credit referencing agencies; they don’t have their own data and they need to buy it from other credit referencing agencies. Why does this matter I hear you cry!!
Well, simply put, it is behind the times, if they buy data from another agency it will never be as up to date as the data held by the selling agency who will want to ensure their data and reports are up to date first. Then, the “virtual agency” need to format the data for their own reports and branding, that takes time.
So, if a credit referencing agency becomes aware of negative information say like court judgments or winding up petitions, that is the kind of information you want to hear about quickly and not wait on the main agency selling it to the “virtual agency” for them to update their systems and send out alerts or update reports.
Then we move on to what I like to call the “virtual virtual agency” those who buy the data from the “virtual agency” and rehash it into their own formatting and branding. The “Virtual agency” like the original data owner, will ensure their systems and reports are up to date before reselling the data to the “virtual virtual agency”!! I will leave it to your imagination as to how out of date the data then becomes as in essence it has become third party information.
So, in turning back to where the information originates from in the first instance, there are various sources and one of those is the big filing cabinet (Companies House) and that is only as accurate as what the companies actually tell Companies House who don’t check it is accurate in the first place. Another source is “contacts” or “industry intelligence” which can prove crucial. In other words, feedback from customers and others in the industry.
1. Consider your credit risk information provider very carefully
2. Do they own the data? If not, how up to date is it?
3. Where do they get their information from?
4. What if you need more up to date information? Will you be able to approach your agency and ask them to investigate the subject (company, partnership, sole trader) and conduct interviews with them?
5. What information do they hold on other entries such as Charities, Housing Associations, Local Authorities, Sole Traders etc. I am sure they all claim to have information and that in instances where they don’t then they will claim that no one else has but, that is simply untrue and is nothing more than a poor sales pitch.
6. Consider the knowledge of the salesperson at the agency, are they simply call center staff reading from a script or do they have in-depth knowledge of their products, services and the industry?
All the above is crucial not only in considering your supplier of credit referencing information but, in considering risk of granting credit to customers new and old.
Please feel free to contact me if you require any further information.
JMS Credit Consultancy