How does having many credit searches affect you?

cash-magnet

I'd be concerned if having credit searches could affect you so much, as by their very nature they are carried out by every financial business on almost every dealing you have with them. Surely everyone would be failing in a very short time if they had so great an impact against you?

Every time I open any new current account with no credit facilities or overdrafts, they say they will credit search me, and this is standard practice when I open a 2nd or 3rd account at banks I already hold active accounts with, so what must they think when they see all these searches on my reports?

luckyfool

Having a large number of credit searches/applications for credit in a short and recent span of time can be a sign of desperation/overcommittedness/someone running up as much credit as possible before fleeing to Rio with the proceeds. Understandably lenders will take that into account when setting up their credit scoring system.

thriftymomma

Generally speaking, if you are opening new accounts with banks you have been with a while, they will only do a soft search, which will only show to you and not prospective lenders.
Also someone who has a generally good credit wotnot, can have 2 or 3 searches every six months to no detriment. It's just one of a number of factors.

cash-magnet

luckyfool wrote: »

Having a large number of credit searches/applications for credit in a short and recent span of time can be a sign of desperation/overcommittedness/someone running up as much credit as possible before fleeing to Rio with the proceeds. Understandably lenders will take that into account when setting up their credit scoring system.

I'd agree with your response in general, but I have not been applying for any credit products at all, hence asking why they keep credit searching you for a product that has no credit facilities attached to it. I tried googling on the different sorts of credit searches there are but could not find a definitive list explaining types applied to your reports.

Let's use an example: Person holds just one credit card held for many years and is paid off in full every month, has never missed a payment on anything in their life, owns their property after paying off the mortgage, many current bank accounts with no overdraft facilities on any off them and each holding several thousand pounds earning interest paid for by the bank...

They apply to open a Lloyds Vantage account because it will pay 4% on the money deposited. At the time of application, no credit or overdraft facilities are requested, they just want to put their £7000 into the bank account and get 4%, and the bank is happy with this (they are getting a cheap cash injection of £7000 after all)...

They tell the applicant they will be credit checked and a search is logged against their credit report...

So, what sort of credit check is done, and what effect does this have if this pattern of activity is repeated quite a few times a year to maximise the interest your money can earn?

This is where the irony would be that opening bank accounts to deposit money created so many searches on your report that YOU actually start to look a bad risk to others simply by the number of searches the banks (your borrowers) have logged against you.

Any more thoughts please?

FraudBuster

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