Experian warns credit crisis is moving mainstream

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Experian, the world's biggest credit-checking company, is cracking down on costs to weather tough times ahead after warning that the financial crisis was spreading from the capital markets to the mainstream US economy.

The company announced a 15 per cent increase in full-year operating profit to $820m (£415m) yesterday but said conditions remained challenging as financial turmoil cuts demand for its core services. Don Robert, Experian's chief executive, said: "The action seems to be moving from Wall Street to main street, from the capital markets to the consumer." Confidence and credit quality in the US were getting worse though the UK was suffering less, he added.

Experian, which was demerged from Argos in 2006, is best known for checking customers' creditworthiness for banks and other financial companies. The credit services business has been hit by the financial crisis as lenders have reined in their activities. Revenue from US credit services was flat from the year before.

"While it is still too early to call a turn in the US and the UK financial services markets, and US credit services continues to soften, we have taken the necessary steps to reduce costs and protect margins," Mr Robert said.

Experian had already announced plans to cut costs by $80m a year, a figure it raised to $110m yesterday. The company also said its other businesses were helping to make up for the slump in credit checking.

In the UK, credit services increased revenue by 4 per cent as demand for information on businesses offset a slump in personal information business caused by "unprecedented market conditions that affected the financial services sector".

Some market experts believe the financial turmoil may have passed its worst point as lenders rebuild capital and central banks support markets with liquidity. But others have warned the crisis will spread to the wider economy as tighter credit takes its toll on consumers and businesses.

Employment intentions among UK businesses hit their lowest level in at least 11 years last month, according to a Bank of England report published yesterday.

The monthly survey by the Bank's regional agents – covering 650 companies – showed employment intentions plunged to the lowest since the study began in 1997.

The Bank also pointed to "credit rationing" as lenders clamp down and firms become wary of borrowing over concern about their ability to repay debt.