How Much Do Credit Checks Actually Affect Your Score?

kittykatkat

We have been accepted for a mortgage (so have had the credit check) but are pulling out due to issues with the house itself. We are therefore going to rent for a while (letting agent is doing a credit check) and since my husband needs internet access for work, we can't wait the usual 2 - 3 weeks for the ISP to enable the line at the rental place so are planning to sign up to a short term contract 3G package (and therefore another credit check).

This makes 3 credit checks within about a month, on top of one a few months ago too. Before that we had gone years without one. We both have clean credit histories - a previous joint mortgage paid for 5 years with no issues, a few credit cards paid off in full each month, no outstanding loans balances at all.

How much will this sudden burst of credit checks actually affect our ratings? Also, for how long? Obviously we will be applying for another mortgage when we find a new house (which may or may not be the same one as we've been accepted for depending on how long we take). The nearest advice I can find online is always along the lines of:

"making numerous applications for credit within a short space of time can adversely affect your credit rating."

But "numerous", "short" and "adversely" are all relative!:money:

DVardysShadow

The 'credit score' you pay for is not what lending decisions are made on. What matters is the scoring system of individual lenders. So you are not going to get anything like a conclusive answer.

The_J

Depending on the lender it ranges from "Not a lot" to "A lot"

kittykatkat

I would have thought there must be some sort of set of rules to come up with a score? It's starting to sound like it's just a work of fiction, pick a number between 1 and 999.

nick_

There are "rules" however as somebody said above, it depends on the lender. I think one of the most misleading things on a credit score is the number that it produces. It's more how your overall report (not score necessarily) is interpreted.

In this case, making lots of applications for credit makes lenders think, "this guy/girl is desperate for credit" - it envokes suspicion. Don't think on the basis of, 1 credit check = -10 points.

Your credit score is much more complicated than just a number out of 1,000, hence it can be interpreted in an infinite number of ways.

DVardysShadow

kittykatkat wrote: »

I would have thought there must be some sort of set of rules to come up with a score? It's starting to sound like it's just a work of fiction, pick a number between 1 and 999.

Yes, there is a set of rules. More than 1 set of rules. Everyone has their own rules and comes up with their own score.

What is common to all of the scoring systems is the data from the Credit Referencing Agencies. but everyone weights and rates that information how they choose. Some may be fussy about late payments and defaults but not bothered about overall available credit. Others might be more concerned about available credit as a percentage of annual pay, but not be concerned about late payments.

If you think about it, you would not want it any other way. If there were one common set of rules, then you would either get credit with everyone or you would get it with no one. Which would very rapidly lead to an underclass with no access to credit.

I am very concerned about the extent to which people like you put such great store on your Experian so called 'credit score'. If this gathers too much mind share and lenders then go along with it because it is the easiest way to justify their decisions to consumers, we will end up in exactly that situation, that either you can get credit with everyone, or you can get it with no one.

Please stop giving this so called 'credit score' such a big mindshare.

kittykatkat

Ok, to put it another way, how much weight does 3 applications in 6 weeks have against an umblemished credit record, with no debt, no missed payments, a few credit cards paid off in full each month, etc?

The_J

Depending on the lender it ranges from "Not a lot" to "A lot".

Experian_company_representative

It also depends on the other information available. Credit-application searches are rarely scored in isolation.

James Jones

betmunch

kittykatkat wrote: »

I would have thought there must be some sort of set of rules to come up with a score? It's starting to sound like it's just a work of fiction, pick a number between 1 and 999.

Thats exactly whats happening, ignor the score you are being given.

Listen to The J's advice.

Every Lender is different and they will score you according to their rules (nod to DVardy)

You seem to be worrying about an unknown effect on and unknown number, which has no relevance to what you are doing.

All anyone can tell you is that their is likely to be an effect, but not what the effect is.

My personaly opinion (and thats all it is) is that a change of address within 6 months is going to have more of an effect on your credit score than three credit checks made as you changed that address, but you dont seem concerned about moving into rented.

kittykatkat

True, but unless we want to be homeless much longer, we have no option but to rent, our sale completed a while ago now. We can control how many credit searches get made on us though.