“Mirror, Mirror on the Wall, who is the Fairest of us All”. Perhaps this quote from one of Grimm’s fairytales could be applied to the attempt to rate the performance of UK Credit Rating Services. Experian Ltd. commissioned an independent party, Electronic Publishing Ltd. and Loughborough University to establish a sound methodology to ensure objectivity and statistical validity; to conduct the benchmarking exercise on the basis of a level playing field; and to deliver a report which could be made publicly available. The report was published last September and can be downloaded from the SAGE Publications Website for a fee (www.sagepub.com).
Six companies were evaluated: Creditsafe; D&B, Equifax, Experian, Graydon and ICC. Using a combination of timeliness, coverage, ease of use and accuracy of information, based on a sample of 100 records, Experian coming out best, Equifax and ICC tied for second best, followed by Creditsafe. D&B and Graydon performed the worst. The authors of the report admitted: “Arriving at an overall view is … difficult, since the result varies, according to the number of criteria rated and the relative weight given to each criterion”.
BIIA comment: The term credit rating applies to rating agencies such as Moody’s, S&P and Fitch, which were not subject to the evaluation. The more appropriate term for the six companies is business credit information, and not credit rating. More important, the critical element in credit information services today is credit scoring, which is missing entirely from the evaluation.
Since Experian is a leader in credit scoring services, this raises the question why this criterion was not included in the evaluation.