Credit Scoring - Credit Application/Search Implications

darrinm81

Hi,

How many credit searches/applications in what period begin to negatively impact your credit score?

If I applied for a agreement in principle and a mortgage in one month. What impact will this have on my credit score?

I have searched around but there doesn't appear to be a golden rule. In America lenders ignore 30 days prior to application to allow for shopping around. I doubt this applies in the UK.

Will 2/3/4 in a one month period lead to rejection?

Will running a check through Equifax trigger anything on the record? I have read it has no impact.

Thanks.

kingstreet

darrinm81 wrote: »

Hi,

How many credit searches/applications in what period begin to negatively impact your credit score?

If I applied for a agreement in principle and a mortgage in one month. What impact will this have on my credit score?

I have searched around but there doesn't appear to be a golden rule. In America lenders ignore 30 days prior to application to allow for shopping around. I doubt this applies in the UK.

Will 2/3/4 in a one month period lead to rejection?

Will running a check through Equifax trigger anything on the record? I have read it has no impact.

Thanks.

You can apply to the CRAs for copies of your credit file and no record is shown to a lender.

I've always felt (no evidence to support/disprove) you can safely have a couple of searches done during the mortgage process. Over the years I've regularly done AIPs for potential buyers with one lender, then done full applications with a different lender because they had the best deal at the time of application.

I would limit myself to two searches if I was moving now.

darrinm81

Thanks for the reply.

From further reading it seems like it really depends on the lender. Most of the publications I have looked at don't quantify what constitutes a large number of 'hard' inquiries; and what type impact your assessment.

Probably the best article I have found is here however cannot vouch for the legitimacy of the website (they may have links to credit rating agencies):
http://www.thecreditagency.co.uk/credit-report/check-my/credit-search.html

A number of checks do impact your score, but if with the same lender then not so bad:

Yes they do. Where an individual that doesn’t already have an account with a lender, a higher weighting is given to the importance on the number of previous credit searches carried out on a customer. Where an individual already has an account with a lender (e.g. bank account), the lenders will give a lesser weighting towards the number of credit searches carried out and will focus more heavily on the way they have managed their existing relationship with the lender.

Some lenders may consider a high number of searches being associated with the customer shopping around:

Between five and eight searches is the point at which most lenders would consider a persons credit report to be adversely affected. Sub-prime lenders may work to a higher number of searches as these customers are likely to have to shop around more. These figures were correct during 2009.In the past, two or three searches within a short period of time could have adversely affected a customer’s credit score. However, lenders have now adjusted their credit scoring models to allow for a greater number of credit searches before they consider a customers credit report to be adversely affected on lenders credit scoring models. The reason for this is to recognise that customers have become more active in shopping around to find the best credit deals in recent times

Of interest in other papers is that the lender doesn't always need to perform a hard inquiry. Therefore when shopping around it pays to ask whether a hard/soft inquiry will be performed.

Let's see what happens this week. The frustrating thing is, when you get knocked back on the credit history check the common recommendation is: "wait 6-12 months!". Ouch!

Edit:
Another article discussing the topic:
http://www.checkmyfile.com/articles/200/credit-score/credit-searches-can-damage-your-credit-report---true-or-false?.htm

stephenbalmer

Hi There,

Just thought I would add to this with a little recent experience.

Over the last 60 days I have the following on my Credit Reference due to the moving house process aligning with my car lease replacement and my mobile phone contract expiring;

Halifax - Mortgage Promise (AIP) non-footprint search
Halifax - Current Account Application in order to attract better mortgage rate
Halifax - Full mortgage appliction and approval
RBS - House content Insurance
BMW - New car purchase
O2 - New phone contract.

I had no problem with any of the above. All are on my record and my 'Equifax Score' began at excellent and is now good. Prior to these applications, there were no searches on my file for 3 years.

Not sure if this is typical, but there seems to be some latitude when they recognise that you are moving home?

Have a good day!

Steve.

kingstreet

stephenbalmer wrote: »

Hi There,

Just thought I would add to this with a little recent experience.

Over the last 60 days I have the following on my Credit Reference due to the moving house process aligning with my car lease replacement and my mobile phone contract expiring;

Halifax - Mortgage Promise (AIP) non-footprint search
Halifax - Current Account Application in order to attract better mortgage rate
Halifax - Full mortgage appliction and approval
RBS - House content Insurance
BMW - New car purchase
O2 - New phone contract.

I had no problem with any of the above. All are on my record and my 'Equifax Score' began at excellent and is now good. Prior to these applications, there were no searches on my file for 3 years.

Not sure if this is typical, but there seems to be some latitude when they recognise that you are moving home?

Have a good day!

Steve.

The insurance search is probably an unrecorded address check, rather than a credit check. Is it noted on the file as an "unrecorded enquiry?"