Credit score and mortgage deals search

Can a Re-mortgage harm one’s credit score?

Being a mortgage broker, I think that carrying out across the market research is a real advantage. Mainly because it allows me to find the best mortgage possible for your circumstances and requirements. Some people are, however, worried about the affect that submitting multiple mortgage searches can have on their credit score. So, what can you do to avoid this and still find the best deal for you?

Credit reference agencies must keep a record when anyone looks at your credit report. This is so that you know who has looked at your report, when and why. these records are called ‘previous searches’ or ‘footprints’ and they stay on your report for up to two years.

There are different types of searches and each will tell you when and why a named organisation carried out the search. Your report can actually be searched for many different reasons, with your permission, including the following:

  • You have asked to see your own report.
  • You have applied for credit and the lender is assessing your creditworthiness.
  • You have applied for another financial product and the organisation is checking your identity.
  • You have asked the lender for a price quotation and they need to look at your report before providing this.

According to Expedia some searches can affect credit scoring because lenders can see any previous searches that resulted from you applying for credit. They can then use these searches to help make decisions about you, normally when calculating your credit score.  other types of searches are not normally visible to lenders and do not affect your score. For example, you can check your own report as often as you wish and this won’t harm your credit rating.

Lenders use previous searches because certain patterns can, along with other information, indicate high-risk. For example, a lot of credit applications in a short space of time can signal someone applying for more credit than they can afford. However, it is possible to have lots of credit-application searches quite legitimately, so lenders always use previous search information along with other information to help build a score.

How can you avoid building up credit searches when researching for new mortgages? James Jones of Expedia recommends that you are clear on the question you ask any prospective mortgage lender. If it’s “if I apply for a mortgage what rate am I likely to get?” then you are merely requesting a credit quotation and, if they need to check your credit report to provide this, the footprint this leaves behind won’t affect credit scoring. If, however, the question is “will you lend me this amount of money?” then that is usually treated as an application – even if it’s only described as a decision in principle – and you should expect this to leave a credit-application footprint on your report.

It is also worth considering that using some of the comparison sites for cheaper insurance can result in a high number of credit searches which can dramatically affect your credit score.

If you are worried about carrying out these searches but still want the best offer for your circumstances we will be happy to help. Get in touch for an initial appointment.

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