Credit Searches - how do these affect your credit rating

hufc2002

Long story short

Bought a new car 5 weeks ago on a 48 month PCP and due to an ongoing issue I have the option of having the car replaced however this would mean the finance on the current agreement being settled (by the finance company) and a new agreement going it's place therefore a new credit search for this new finance agreement will be on my credit report.

As I have only had the car 5 weeks, the initial credit search for my current car (from 5 weeks ago) will also be on my credit report although this will then be settled if I opt to change the car.

What effect will 2 credit searches in a very short space of time have for me?

Thanks

mwarby

Is the new credit a given (new finance by same firm, check just formality) ?

if so the effect will be minimal in a few months, as anyone else searching will see a settled loan and a new loan and limited if any rise in available credit and debt

The bad effect on searches is if you have many applications in a month or so, its not possible for lenders to know what you've been accepted for and with what limit, this make it difficult to access affordability. The other factor is it can make you seem desperate, which is a sign of negative changes(your grabbing credit while you still can)

hufc2002

Yes it is new finance but with the same provider (BMW Financial Services).

The new agreement will need to be approved before the current one is settled which is the big that concerns me. What if the new finance application is declined? I would understand why.

mwarby

I would think it would only be declined in new agreement is unaffordable, I'm sure they can ensure they make a profit on it. If new agreement is declined maybe worth appealing

hufc2002

Well the new agreement potentially would be unaffordable if the current agreement isn't then settled as I would have then taken out £50k credit in total rather than £25k.

reclusive46

hufc2002 wrote: »

Well the new agreement potentially would be unaffordable if the current agreement isn't then settled as I would have then taken out £50k credit in total rather than £25k.

I wouldn't worry. Even in the unlikely situation of it being declined, they dealership would just call the underwriters, explain the situation and get it resolved.

hufc2002

So will this therefore not cause too much harm to my credit rating?

The option of having my car replaced is a good one however I don't want it having a detrimental effect later down the line.