Does phoning around for the best loan alter my credit rating?

BrummieMoneypenny

MSE virgin - be gentle with me.

I'm looking to move my Cahoot loan as it risen from 9% to 12.2% and was told by Northern Rock that if I phone around too many lenders that my credit rating is affected. Northern Rock were only the second people I'd called and I've not called anyone after.

Can the good people of MSE enlighten me as to why Cahoot only take off the interest every month and not the actual amount I pay? I always pay in £100 a month and they only take £17 or so off the loan amount. Any help greatly appreciated

_Andy_

Loans are front-loaded so in the earlier days you're predominantly paying off interest and not the capital. In the later days of the loan this reverses - overall you end up paying back the entire balance.

Waldir

BrummieMoneypenny wrote:

Can the good people of MSE enlighten me as to why Cahoot only take off the interest every month and not the actual amount I pay? I always pay in £100 a month and they only take £17 or so off the loan amount. Any help greatly appreciated

Hi

If you borrowed, say, £11000 at 9%, you'd pay ~£82.50 of interest per month (£110000*9%/12).
Paying £100 in your account means that £82.50 is used to pay the monthly interest and £17.50 is used to repay the capital.

Next month, you will only pay interest on £11000-£17.50... therefore a bit less interest and more capital. And so on every month, paying less and less interest and repaying the capital faster and faster.

Cumbrian_Male

Each application that involves a credit check will leave a footprint on your file.

So the next company to look will see the previous company who looked.

When you ring up for quotes ask for a decision in principle only and ask if it will involve a credit search. If you get a lot in a short space of time you could look as though you are desparate for credit, thus harming you chance of getting a good rate or even an offer.

Each company only sees the search they don't know if you were passed or declined or if you even took the loan.

If you have had a few it may be beneficial to wait 2 or 3 months before applying again.