IS SHOPPING AROUND DAMAGING YOUR CREDIT RATING?
More and more savvy consumers are shopping around for a mortgage or a loan to ensure they find the best deal on the market. MyEquifax.co.uk, the instant online credit information provider, warns consumers that this may be affecting their chances of gaining credit if they are not informing lenders that they are making an enquiry and not a full application.
Each time a consumer enquires about credit, regardless of whether they make an actual application, lenders may log the enquiry as a 'credit search'. A high number of credit searches on a credit file can ring warning bells for lenders because they might indicate that an individual is over-committing themselves or that their identity is being used fraudulently.
Neil Munroe, External Affairs Director MyEquifax explains, "The industry has recognised that it is becoming standard practice for consumers to shop around for the best credit deal on the market. Therefore to ensure these enquiries do not have a negative impact on a person's credit rating, credit reference agencies have created a new type of search called a 'quotation search'. This means that when a consumer shops around for credit, lenders can log this as a 'quotation search' and not a 'credit search'. It will then clearly show up on their credit report so other lenders will be aware and won't have a negative affect on an individual's credit rating.
"We advise consumers if they are going to shop around for credit to obtain a copy of their Credit Report before and after. This will ensure the information held on them is up to date, plus they will be able to review how lenders have logged a 'quotation search' and if need be arrange with them to have it reclassified."
If an individual is declined credit they should ask the lender why. If it is because of information supplied by a credit reference agency, they should stop applying for further credit and apply for a copy of their credit file. Consumers can then review the information held on them and ascertain if there is any adverse information affecting their ability to gain credit.
Top Tips For Improving Your Credit Rating Before Shopping Around For Credit
- Apply for a copy of your Equifax Credit Rating before shopping around or applying for credit
- Make sure you are registered on the Electoral Roll - this is an essential way for lenders to verify an applicant's identity and prevent ID fraud
- Be aware of credit searches on your Credit File when shopping around and how it can affect your credit rating
- Close old credit card accounts - even they show a zero balance lenders will look at the potential credit available when assessing applications
- If you have been previously turned down for credit or are concerned about a low credit rating, where possible apply for credit face to face with a lender. This way you can ask questions and provide documentation to support your application
- For information that is factually correct but you believe creates a misleading impression that may impact on your ability to obtain credit, you can add a Notice of Correction.
- If you are declined credit DO NOT apply to other lenders. Apply for a copy of your credit file at www.myequifax.co.uk
For just £14.95 consumers can obtain a copy of their Credit Rating, which includes their Credit Report, instantly, online at www.myequifax.co.uk.
If you are looking for commentary on this subject, Equifax can provide consumer credit information experts who have extensive experience on this issue.
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