First Direct Switch: Credit Rating Affected

Danosaurus

Hi,

I was hoping I would be able to get some advice. I recently saw the switch offer on MSE to First Direct for the £150 bonus. As I'm currently looking to purchase a house as a first time buyer I decided to phone First Direct and ask if my Credit Rating would suffer if I switched my account. I was informed that my Credit Rating would not be affected at all. I also read through their FAQ which they sent through and my worries were eased when I read the following:

"Will switching my current account affect my credit rating? No, providing you repay any outstanding overdraft(s) on your previous account(s) as required by your old bank or building society. If there are any problems with payments (as part of the switching process) your new bank or building society will correct them and ensure your credit rating is not affected."

However after signing up to Experian in order to check my Credit Rating I noticed that 3 credit checks have been performed by First Direct which have all had a negative impact as well as the fact that 1 new credit account has been opened. As a result I've gone from a borderline excellent credit rating to just on the top edge of a fair credit rating. This in theory could potentially mean the difference from a £150,000 to £140,000 mortgage.

I'm therefore curious if I have any options available to me (would it be unreasonable to ask for compensation from First Direct?) or if I just need to grin and bear it and learn from my experience?

Thanks for any help,
Daniel

Doctor_Duke

I don't see how FD would have done three searches, it's normally one "application" search plus ID checks. Having just one search isn't going to affect your credit worthiness. Experian score is not what matters as lenders can't see it. They can see the searches so do check that FD only made one "hard" search. This search alone won't impact your credit worthiness for a mortgage but restricting any searches for 6 months prior to a mortgage application is seen as sensible on most guides.

meer53

Opening the account will generate a search, The switch won't.

pmduk

The Experian score isn't worth the pixels used to display it. Each bank makes it's own decision on an ever-changing algorithm of data which is closely guarded as it is commercially sensitive. One change of current account makes little difference, however lots of credit searches may indicate a need for credit and make you less attractive to a lender.

Thrugelmir

Danosaurus wrote: »

This in theory could potentially mean the difference from a £150,000 to £140,000 mortgage.

Who said this would be the case?

YorkshireBoy

Hopefully (when you confirm) the searches will be:

1. The application 'hard' search.
2. An application ID enquiry 'soft' search.
3. Another ID enquiry 'soft' search...this time during a manual review of your application.

However, you have a potentially larger problem...the mortgage lender will be looking for signs of stability, eg time in job, time at address, on ER, and also time with bank. It's this last one that won't look good if you're borderline in other areas, not a current account search.

Doctor_Duke

I am sure Yorkshire is right about how the type of searches that FD have done but the OP should contact FD if unsure. Stability is very true and always best to keep your longest open current account, simply that open! Switch other accounts.

alternate

Important things like mortgages - they are not going to just read off your credit score. They will do a proper analysis. Credit rating is for small things such as credit cards and bank accounts - so the computer can give you an instant decision.