Experian’s massive database enables it to develop detailed “credit ratings”1 for each of the adult population. Its core clients have inevitably been banks, credit card companies and major retailers on whose behalf it carries out some 1.5 million checks a week. But in recent years Experian has appreciated the wider significance of all the information it holds. The Conservatives and Labor parties have used the Mosaic database it developed under which voters are divided into 67 demographic groups, given such names as “high-spending families”. For the political parties the attraction was obvious, enabling them to produce targeted letters to voters.
There are also huge potential savings for ministries in using Experian to cut benefit fraud, as well as for town hall chiefs trying to track down people claiming housing benefit from several addresses. The previous government commissioned Experian to conduct tests on reducing housing benefit fraud in nine areas which it said saved the taxpayer up to £17m. It looked for patterns of spending that suggested claimants had other sources of income that they were not declaring. Experian has also been negotiating with the Department for Work and Pensions over tackling incapacity benefit fraud, claiming it can achieve savings of £300m. HM Revenue and Customs uses Experian to check on the eligibility of tax credit claimants. Source: Independent
1 It is interesting to note the use of the term ‘credit ratings’ to describe the creditworthiness of consumer. This ‘outdated’ description confuses regulators and the general public because the term ‘credit rating’ is used today predominantly in the rating of capital markets debt instruments (bonds). A ‘credit score’ is the more applicable term in describing the creditworthiness of consumers and SMEs.
