5 common misconceptions in credit data pricing

In this blog, we debunk the top five misconceptions that we hear from credit providers – the blockers that stop them from getting the best price for credit data.

Did you know? Prices can vary by upto 500%. Even if you choose to stay with the same credit data provider, you can get more favourable terms by renegotiate mid-contract or at renewal.

Plus, there's an extra unignorable misconception: compliance. Credit providers could be exposed to noncompliance as well as unwittingly using a sub-standard data source - even if the bureau you use is a known brand. Areas of concern among others are UBO for AMLD 6 compliance, marketing data that is GDPR compliant and inferior fraud checks.

Here's the misconceptions and our top tips so your credit risk programmes are powered by the best quality data…

Misconception #1: We negotiated a really good price last year

It's likely that the previous or current pricing is massively inflated and therefore new rates are still high and costs can be reduced.

Top tip: If this is you, don't fret - you can renegotiate these contracts mid-term. 

Misconception #2: We need to spend hundreds or thousands to achieve low rates per search. Or, be a key account to the bureau.

Actually, many smaller spenders are benefiting from higher discounted prices compared to larger spenders.

Top tip: A data benchmarking exercise can flag the best prices and quality available to you for cost savings and improved risk programmes.

Misconception #3: One bureau has such better quality data that it's worth the premium price

Each of the bureaux claims strengths over competitors. In reality, there are marginal differences that shouldn't impact pricing.

Top tip: Using data benchmarking shows the additional discounts and preferential terms the bureaux are offering to customers to help negotiate a fairer price.

Misconception #4: Our preferred bureau has the best sources of data for our UK & International risk and compliance requirements

The bureaux use multiple 3rd party data suppliers to offer this service to you - the cost of this is added to your bill.

And, these suppliers may not be the best or most suitable or cost-effective for your needs.

Top tip: Knowing the cost margin levied to you is extremely useful when negotiating rates with the bureaux.

Misconception #5: The cost of change prohibits us from switching supplier

The bureaux know this. As a result, many credit providers pay a higher price for data overall as the bureaux don't pass on discounts they are offering to others.

Top tip: Pricing benchmarking creates transparency and strips the bureaux of the option to offer anything but uninflated, fairer prices as it allows the customer to challenge pricing comparable to peers with similar use. 

The unignorable misconception: Compliance

Our supplier is a market leader and we are happy with our risk and compliance searches. We, like others, rely on the fact that the market leaders' products and services will be fully compliant with few gaps in coverage and hold completely accurate data.

Shockingly, this is not the case and the customer could be exposed to noncompliance as well as unwittingly using a sub-standard data source, even though they are utilising a known brand. Areas of concern among others are UBO for AMLD 6 compliance, marketing data that is GDPR compliant and inferior fraud checks.

Top tip: It is always useful to carry out a review of all data sources to optimise the quality and ensure compliance whilst sense checking pricing.

Example savings using data benchmarking

• Finance Customer (Consumer): £750,000 saving over 3 years (25%)
• Retail Customer (Consumer): £3,000,000 saving over 5 years (23%)
• Motor Finance Customer (Consumer): £112,000 saving over 2 years (58%)
• Banking Customer Global (Consumer): £1,500,000 saving over 2 years (43%)
• Energy Customer (Commercial): £50,000 saving over 1 year (27.5%)
• Finance Customer Global (Commercial): £255,000 saving over 3 years (66.6%)
• Oil Company Global (Commercial): £6,000,000 saving over 3 years (50%)
• Brewery UK (Commercial): £120,000 saving over 3 years (50%)