The Competition and Markets Authority (CMA), which referred the deal for an in-depth probe in July, said it could reduce competition in the credit comparison and checking markets.
It is feared that a combination of the two companies could reduce their incentives to innovate or reduce prices, leading consumers to pay more for credit cards and loans.
Experian said in a statement that it was “disappointed” with the outcome.
“We continue to strongly believe that the acquisition of ClearScore will have a positive impact on competition, allowing Experian to help more consumers with their finances by providing greater choice and convenience to them to access personal finance products at the best prices,” the company said.
“We also believe we will be able innovate more and better through the combination of the parties’ complementary assets and innovation cultures.”
The CMA has now invited comments on the findings ahead of a December 19 deadline. It must make a final decision by March 11 2019.
Experian said it would continue to work with the CMA and seek to address its concerns.
The watchdog also said on Wednesday that the only effective remedy for its competition concerns was prohibition of the merger.
The regulator typically suggests remedies such as restructuring or disposals which would allow deals to go ahead.
Experian’s acquisition of Clearscore was first announced in March, valuing the three-year-old company at £275m.