Do IFA's usually do a credit check without asking?

henry123_2

I asked a Financial Advisor to see what Mortgage deals he could obtain and to come back to me with the best deal.

He had come out to visit us previously which we did not want. It was painful and he asked lots of questions not relating to a mortgage but more to do with things like life insurance, he even wanted to see a copy of our life insurance policy.

Our house move is rushed so we just went straight back to him and said, "quick find us the best rate"

A week later he said he was in negotiating with a lender to trim and tweak a mortgage deal and let slip he thought it would be o.k becuase we had an A+ credit rating.

I was concerned why a credit check had been done without out permission.

The next day the story had changed as he said no mortgages had been applied for and he would wait until the day he visited before searching the best deal.

I then asked if he had done the credit check and he said, "yes but indirectly."

It's all getting very annoying. Is this normal behaviour?

At the moment we are giving him the benefit of doubt as we assume he wanted to know our credit so he could get the best deal. We hope he has some good deals when he visits, he won't tell us over the phone.

herbiesjp

He does not sound like someone I could trust.

One minute its yes, then its no, then its yes but indirectly?!

Why can he not give you a straight answer?

He should not really do any credit searches until he has discused the options with you, and you have chosen the deal you like.

Would he be able to give a straight answer to:
Has the application been submitted?
Has the survey been done?
Has the offer letter been issued?

As you need to move quickly, you need someone who can be honest with you to achieve the same goal.

KrisBolton

Credit checks should never be done without permission.

All advisers need some answers to pertinent questions like credit history to be answered by their clients (hopefully honestly), and this should be sufficient to do research. We do work on the information that we can garner from the client, and to a certain extent have to rely on it, but a credit check is never done until a deal is explained, the KFI given, and agreement reached between the client and the adviser.

A series of credit checks does lower a clients credit score, and while one or two will not ring massive worries to potential lenders, more than that may cause a problem.

When you spoke to the IFA, did they do a credit search with Experian/Equifax, which is not normally a problem as it details a client's credit history, current credit accounts and payment history or did they actually place the application with a lender.

If your adviser cannot answer you truthfully, get a new one.

henry123_2

our instinct tells us to find a new advisor or simply apply direct ourselves.

we just wooundered if:

he did a credit check to help him find the best deal for us
he is stalling us because of a possible rate review?
maybe he thinks he can source a better deal on Monday?


do you think there is more or less chance there will be lower fixed rate deals on Monday??

KrisBolton

Your instincts are right.

The credit check may help him/her to source a better deal for you, but this is usually done without a credit check. Did you indicate to him/her that you had any previous problems with credit? This may be why the credit check was done, as a case which has previous credit problems needs to be assessed quite differently than one that doesn't. They should still have had your permission to do the check in either case though.

With regards to him/her stalling, I can't comment on why. Rate changes are happening every day at the moment, so could possibly be the reason.

In the current market, rates are moving both up and down depending on the lender (Nationwide dropped them recently, while others are increasing them), so Monday may offer new deals.

henry123_2

we never gave permission, didn't sign anything and to be honest never thought for one minute he would do a credit check.

we never said we had a credit problem, and I knew my credit would be fine, we have no loans, or outstanding cards. We pay off a balance in full each month for the last 5 years, never missed a payment etc..

I can only assume it was because my taxable income was so low (at my tax allowance). My wife earns all the money.

Amme25

I know from experience that some (and please don't think I mean all) mortgage advisors will do credit checks as soon as they see a client. Having had alot of experiences in this area the main reasons they do it:
They believe it has an influence over what type of deal they can get you.
It can influence how much they charge you (a poor credit rating will mean they have to do more searching or covering up of problems)
It can speed up the process and they will know next time they come back to have all the paperwork prepared for you to sign

The simple fact is, if you are unhappy then he will have lost your trust and there isn't much he can do that will turn your opinion around. You don't have to trust someone to do business with them but when it comes to buying houses you put your heart and soul into it. If you have second thoughts, go elsewhere.

All the best!

KrisBolton

Amme25 you are right with your comment about mortgage advisers. Some do credit checks as soon as they can. Not all but some.

Though it doesn't have any influence over what type of deal the adviser can get for you as each lender has criteria and scoring systems that are individual to the lender. It wouldn't matter if they did a credit check at first meeting or after going though the KFI with the client. Exception to the rule is if the rates are being withdrawn and the adviser knew which lender they were going to use from the initial meeting and needed to secure the funds. This is the only time that I can think where a better rate could be secured by doing a credit check.

Poor credit does make more work for an adviser, and a credit search at this point is advisable as the deal can then be placed with the most appropriate lender at the most competitive rate. And for the advisers that charge fees, you are correct in thinking this will affect the fee level charged.

If you are unhappy with the adviser Henry123, get another, there are plenty of honest, whole of market advisers out there who you could trust. Taxable income is an important part of the assessment and recommendation process, but not a reason to do a credit check.

henry123_2

on a slightly different note:

I want a 5 yr fixed rate and found the Woolwich of my own back at 5.59%, despite the higher fees I will get those back over the 5 years based on a £109,000 mortgage.

I've compared it against fees/rates of all lenders that I match the lending criteria and over 5 yrs it saves me the most money.

I contacted the Woolwich and got an agreement in principle from their underwriter based on the detailed income figures I supplied.

I am applying for a NS&I ISA as we speak to act as a repayment vehicle.

I have 2 young children 1 & 3 yrs and we want the security of fixed payments for at least 5 years. My part-time job income would be reduced slighlty in times of high rates and increase in times of low-interest rates (so I won't be too bothered if rates bottom becuase I should have a lot more work!)

I think I've done all my home work now.

In short, if I have made my mind up on all this then will it be o.k for me to just apply myself direct?

Do I win a prize?

herbiesjp

Go for it!

Prize is, you know exactly where you stand as you are in control!

Unlike your current broker who seems to be a bit too cloak and dagger for my liking.

Might still be worth him coming round to see what he can offer - and then you'll be even happier once you have seen the deal you have is better than what he has just shown you.

KrisBolton

henry123 I'm glad you found a deal that suits you.

By all means apply for the mortgage on your own, I just hope that the experience you've had hasn't spoiled your opinion of advisers.

As for your prize:

A mortgage that you're happy with!