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Moneybox Saturday, 12 October, 2002, 12:08 GMT 13:08 UK
Credit agency checks questioned
Man, computer and cash
Experian's credit checking system is under the spotlight

Small businesses may be rejected for credit unfairly while companies continue to use an old system provided by a credit reference agency.

Experian is one of two agencies in Britain that gives credit ratings to companies.

Its reports are used by around 40,000 suppliers to decide whether to do business with new customers.

And half of them are still connected to an old system which ignores a company's payment records and can give low scores to sound businesses.

Commercial Delphi

Experian recently launched Commercial Delphi, which they say improves the ability to predict company failure.

But the system is more expensive and so many businesses are continuing with the old one, which gives alarmingly different reports.

Small businessman Roger Tichborne contacted the BBC's Money Box programme after he discovered the inconsistencies.

Mr Tichborne runs a music business in Mill Hill, London.

He applied to music equipment distributors Arbiter to open an account and was surprised to find he was rejected.

Credit score

When he contacted Arbiter to ask why he was turned down they told him they had made the decision based on a credit score provided by Experian.


On some arbitrary credit rating we have been turned down for a major account.


Roger Tichborne

According to the Experian credit score, Mr Tichborne was high risk and had scored only three out of a 100 points.

Mr Tichborne was not happy with the result as he says his company had been trading for five years, is making a profit and always pays invoices on time.

When he contacted Experian he was asked if he would like his company details put through the new system.

This time he received 45 out of 100, giving him 2 stars.

Angry

Mr Tichborne is angry at this inconsistency.

"On some arbitrary credit rating we have been turned down for a major account. That really could damage us."

And he feels it could easily give competitors an unfair advantage.

"If they applied later.. on the new system, they could have the same financial status as us but get the business when we would not."

No obligation

When Money Box approached Experian, Bruno Rost admitted: that the old system is "limiting."


Clients are under no obligation to use the new system.

Experian's Bruno Rost

"We are making all our clients aware of a new and better system that is available." Mr Rost insisted.

And he stressed "It is very important that they do make the effort to move to the new system."

But he admitted "The clients are under no obligation to use the new system."

Transparency

Mr Tichborne feels there should be greater transparency in the way Experian credit score people.

"If they are going to give a reference to people they should supply the company they have given the reference on a copy of that reference.

"They should also supply details of the model they use to produce the reference, so if you get a low rating you can do something about it and take issue with them."

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18 Aug 02 | Business
14 Mar 02 | Business
08 Jan 02 | Consumer
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