The FCA aims to close gaps in borrowers’ credit files and ensure these more accurately reflect people’s financial circumstances.

Credit reference agencies collect personal financial data, including credit repayment histories, to provide lenders with information that helps inform lending decisions.

The FCA says where the information credit reference agencies hold is limited, people may face barriers to accessing credit, or be exposed to increased risks of unaffordable lending, errors or fraud.

The UK’s financial watchdog says its proposals aim to improve how credit information is shared across the system, benefitting both consumers and firms.

FCA director of consumer finance Alison Walters says: “Access to affordable credit relies on good-quality data – it’s vital in helping consumers navigate their financial lives. That’s why we want to make sure everyone’s credit information is as full and accurate as possible.”

The consultation closes on 1 May.

Also commenting, Broadstone senior director of risk Richard Pinch adds: “Ensuring lenders have access to more complete and consistent credit data is a logical and welcome step, as high-quality information sits at the heart of both prudent lending and good consumer outcomes.”

“Requiring firms to share data with all designated credit reference agencies should help reduce blind spots in credit files, improve risk assessment and support more accurate pricing and affordability checks.”

“For lenders, however, the proposals will mean reviewing operational processes to ensure they can comply on a consistent basis. There will also be a focus on data quality as more comprehensive reporting will increase the visibility of any gaps or inaccuracies.”

“If implemented effectively, the reforms have the potential to widen access to credit for consumers, particularly for those whose financial positions are not currently fully reflected in their records.”

“Borrowers could benefit from increased competition in retail lending markets which could feed through into increased choice and potentially more attractive pricing while strengthening safeguards against over-indebtedness.”

“The consultation will be an important opportunity for firms to engage on the practicalities, proportionality and implementation timelines to ensure the new framework delivers the intended benefits across the market.”