The credit agency: Why Experian was enlisted for the battle

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Indy Politics

Judging by its luxurious and airy London headquarters, business is booming for Experian. Corporate clients, including politicians and civil servants, are briefed on the company's products in large presentation rooms in their offices with panoramic views of the capital.

Yet Experian's London operation is just a small part of a global operation that spans 37 countries in six continents, last year recording a profit of more than $600m (£380m) on a turnover of $3.9bn.

Experian traces its roots back to a mail-order company, Great Universal Stores, which was founded in Manchester in 1900. As consumer spending grew in the 1950s, it embarked on the lucrative sideline of checking customers' credit records for other businesses.

A separate firm, CCN, was born in 1980, which was renamed Experian when it took over an American credit reference agency 14 years ago. Today it holds basic information on about 45 million adults in Britain, including records from the electoral roll, defaults on loans, repossessions and bankruptcies. In addition, there is more detailed "marketing lifestyle data" – such as satellite television subscriptions and mobile telephone contracts – on about 14 million people.

Information on about four million companies, 31 million vehicles and more than 90 million driver registration records are also on file.

Experian's massive database enables it to develop detailed "credit ratings" 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 Labour 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 ministers in using Experian in the drive 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.

It 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.

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