Effect of shopping around on my Credit Score?

Wrongfoot

Hi everyone,
I recently applied for a sizable loan of £20k+ to complete a build project after which I can remortgage and (reasonably certainly) incur much cheaper mortgage costs. As such I only need the money for a matter of 3-4 months. It is the final sum we need to complete the build and we are on budget so we will not need to look for more credit. We have no other debt apart from our existing mortgage with an acceptable LtV which will only improve after this build is completed.

I applied for a loan with Sainsburys advertised at 2.9%APR solely in my own name rather than in combination with my partner as I work full time and I am probably the better applicant in terms of credit scoring/affordability. It also seemed wise to minimise the effect on my partners credit score although I'm sure the system knows we are married and the same cost centre. I applied for an 85mth term shorter terms were advertised at a much higher rate and would still incur a 60days interest charge for early repayment.

I was offered a loan at 5.2%APR over the 85 months. This is great but it's more expensive than I hoped - at 2.9% I would have simply paid off the loan over the 85mths as that rate would be cheaper or similar to the rate if we consolidated the loan into a re-mortgage later and we can afford both the loan and mortgage payments for the 85mths (or I wouldn't have applied). At 5.2% it may be better to consolidate. Of course early payment of the loan has a cost.

I asked Sainsbury's how long the quote/offer was valid (28days) and politely if they would offer a better rate (they wouldn't). They said they would price beat any other offer by 0.1%.

However if I shop around any other lender will know I'm sitting on an offer of £20k+ that I might try and take up in addition to anything they offer. They might not offer anything as a result, or they might price to the combined risk (even though I am not so foolish as to take both offers which we couldn't afford). I have a feeling that lenders know this and so Sainsburys price beat commitment is a bit hollow. Am I wrong?

So if I shop around do I risk hammering my credit rating with refusals, ruining my future chance of getting a loan if I don't accept this one? Am I just likely to be refused by other lenders? Does this mean that the first provider who makes you an offer at any rate usually puts you in a take it or leave it situation? Could re-applying with my partner as a co-applicant be a sensible approach?

Can anyone advise how best to shop around, or advise me not to shop around if that's the best approach?

PS. I do understand that Sainsburys only need to offer the advertised rate to 51% of successful applicants.
PPS. I have read the other thread where the OP got short shrift for "complaining" about the rate he was offered from Sainsburys. NB. I'm not complaining I'm trying to understand whether it's practically possible to shop around with the current rating systems which I think is within the ethos of this site isn't it?

[Deleted User]

You don't have a credit rating or score to be hammered.

Lenders will see previous searches but not any names or amounts. They may take this into account in assessing you for risk, but a couple shouldn't be cause for concern for most mainstream lenders.

Nebulous2

Lenders see hard searches, but not amounts or whether you proceeded with the application. The best time to apply is right away, once you get your offer you would like to test against another offer.

To all intents and purposes 5.2% is still a good rate.

If you apply to the market leaders they can be very fussy, as most people who apply to them have very good credit records. I often think it is much more fruitful to move down the table a bit , maybe to one offering 3.3% or so, where the competition is less intense.

Jami74

I was in a similar position but for a much smaller amount and a shorter term.

I applied with Sainsbury's as I have a CC with them and they were advertising the cheapest rate, but the rate they offered me was in the region of 10% which I wasn't prepared to take. I quickly applied to my own bank, who offered me 6% (which is their best rate at the amount I wanted). Then just to be sure, I applied for one more 'further down the table' and they offered me 12%. So I went with my bank. Obviously I'll never know if I applied for the third one first if I'd have gotten their best rate.

Interestingly, a month later I applied for a 0% purchases credit card (to earn some rewards) and got accepted.

Pixie5740

One "hard" search on your credit file isn't going to make much difference to another lender. Several "hard" searches though will make you look like a desperado.