Too many credit searches?

Jazzking

Hi all,

OK, we're in the process of buying a house - not had our offer accepted yet, but looking into what mortgage options are available.

I looked on the Nationwide site to see what was available, and in order to get a Decision in Principle they need to do a credit search. I filled in all the usual, and lo and behold they said they wouldn't lend to us with the amount we needed (I think I asked for 90k on a house priced at 95k)

I went to see an IFA, who was very helpful and went through things with me and thought that Nationwide would be able to lend to us, and put through the first stage of the application asking for 95k on a house worth 100k (we were a bit niave to start with and thought we could get more off the asking price than we probably would)

Bizzarely, the IFA called up on Friday and said that Nationwide would be happy to lend us 95k, based on the credit search and the details that the IFA put down on the form. OK I thought, this is great - however, I didn't have any intention of completing through this adviser since he charged £695 :mad:

So, phoned up Nationwide today and they confirmed that they have the details from the IFA and everything's good to go...
However, my parents kindly agreed to help us a bit with the deposit so we would have a 90% deposit now, rather than a 5% one, and having thought about it I'd rather only be on a deal for 3 years, than the 5 I initially thought.

Mentioned this on the phone to Nationwide, and they said they would still be able to lend to us, but would have to scrap the old app. and start from scratch with another credit search, another agreement inprincipal and finally once our offer has been accepted, complete directly through them rather than going through the broker and paying £695 for not a lot...

Now (finally!) my question is - how badly will these extra credit searches affect my ability to get credit (either on the revised mortgage, or on future credi cards I'm looking to switch to in the next few months)?

I've heard it's best to apply for CCs before you move so you are still registered at the old address, so surely the best time would be after the m/gage has been approved but before we actually move house - correct?

Advice on any/all of the above would be appreciated, I don't really have any intention of completing through a broker since I'm fairly sure the Nationwide deal is the best out there at the mo - but I'd be interested to know how many searches it takes before it looks as if i'm desparate (surely you need to have these done to see if lenders will lend to you though!?)

Thanks v much!
Alex

Dutchgirl_2

Hello,

I've just been through a similar process (changing mortgage amounts and deposits), which meant that I had to do various applications for agreement in principle with three different banks (and one of them did two searches). I was also worried when I heard that this would involve credit searches for all of these. My broker told me, however, that it's normal for people looking for a mortgage to have 3 or 4 credit searches for mortgage lending on their report, so banks wouldn't take much notice of that. I think this was true in my case, because I didn't have any problem getting a new loan and credit card after my mortgage application.

I would suggest asking your broker and IFA if this is also the case for you.

Good luck

Richie(UK)

Hi Alex,

Nationwide may not have done multiple searches. However, rather than trying to second guess what has happened it may be simplest to just get hold of the statutory copies of your Credit History from the two main Credit Reference Agencies. Look at the £2 reports at Experian and Equifax.

Jazzking

Thanks to both of you for repliying.

Dutchgirl - thanks for that, I thought as much since they must expect you to research different lenders before deciding on one, since it's a pretty big decision....

Richie - When I phoned up Nationwide they said they had two records of searches being carried out against my name, presumably once by me online and once through my broker. Why they have to start all over again is beyond me though; I kow they want to have the most up to date records, but if they do a search and that quote is valid for 3 months then my circumstances may have changed since the original search anyway!

I got my credit reports from Equifax and Experian earlier in the year to check everything was OK and they had my correct address as the current one since we'd recently moved into rented accommodation... I was going to leave getting new copies until after we'd moved into the new place; I'll see if it's going to cause any problems. I don't have a bad credit history so hopefully a few more than average searches are to be expected if they are uncovered by other mortgage lenders...

Fairdo_2

Jazzking wrote:

I looked on the Nationwide site to see what was available, and in order to get a Decision in Principle they need to do a credit search. I filled in all the usual, and lo and behold they said they wouldn't lend to us with the amount we needed (I think I asked for 90k on a house priced at 95k)

I went to see an IFA, who was very helpful and went through things with me and thought that Nationwide would be able to lend to us, and put through the first stage of the application asking for 95k on a house worth 100k (we were a bit niave to start with and thought we could get more off the asking price than we probably would)

Bizzarely, the IFA called up on Friday and said that Nationwide would be happy to lend us 95k, based on the credit search and the details that the IFA put down on the form. OK I thought, this is great - however, I didn't have any intention of completing through this adviser since he charged £695 :mad:

Advice on any/all of the above would be appreciated, I don't really have any intention of completing through a broker since I'm fairly sure the Nationwide deal is the best out there at the mo - but I'd be interested to know how many searches it takes before it looks as if i'm desparate (surely you need to have these done to see if lenders will lend to you though!?)

Thanks v much!
Alex

Firstly, I agree that £695 seems to be excessive as a fee to be charged by a broker, but I do also think it is a bit out of order to take their assistance and not allow them to go through with taking the business. Were they going to re-inburse you the Procuration Fee that Nationwide were paying to them? If so, then this may be more true value for the advice.

What did they put on the form that you didn't.

If you go ahead on your own application with the same information that they turned you down for borrowing £90,000 in the first place, why would they change their opinion this time?

If the IFA put information down, were they accurate with the figures they put down, as the AIP (Agreement In Principle) would have to be evidenced in the full application, so it could still be turned down on full Application.

Why don't you check what the IFA would do as payment, as I would imagine they may be open to negotiate as they have done an element of the work already and I would suggest to them that they take the Procuration Fee only and not charge and they can do the work for you and have your business. Otherwise, you will go direct or to a broker that won't charge.

If you continue with the Application that they started on your behalf, they may be able to claim the fee from you even if you do the rest of the work till completion!

In my opinion, if you don't like the fee they are charging, you have the balls to tell them at the time and they know where they stand and can do something about it. The way you have done it so far leaves them thinking they have done their job okay and does not give them the chance to gain your business to everyones satisfaction.

Fairdo_2

chucky wrote:

Hi guys,

An question that I have regarding this is - if you have had too many Credit searches done, how long should you wait for them to not be visible to other potential lenders that would do a search on you?

They will be visible for quite some time, but it is not the visibilty that would necessarily be the problem, it is the effect the credit footprints take on the credit score features that each lender applies, based on their own criteria.

Therefore, it is a bit of a "how long is a piece of string" question.

If you are concerned about how your borrowing may be affected by affordability, then you could do worse than going to one of the HBOS lenders (Halifax, Bank of Scotland, Birmingham Midshires or The Mortgage Business) as they are the first of (hopefully) a large batch to start using "Quotation Searches" which do a credit score for you to have an Agreement In Principle in place without leaving a credit footprint.

This should be the way forward considering so many lenders now work on an "Affordability basis" rather than relying solely on Income Multiples.

Other Lenders seem to be very slow in catching on however. Although they should be able to start this if they are one of these affordability based lenders.

I think a campaign should be started to raise awareness and put lenders under pressure!!!

sandragreen44

I have been following your comments about credit searches with interest. Am I right in thinking that every time I visit a bank or building society site or a site that finds you a mortgage and then go onto their tools to see if I am able to afford the mortgage that a credit score is being kept? (For example I frequently go on the Nationwide site to see if my son earns enough to get a mortgage with them.) I thought that if credit information is kept on your file they would need your name and address? Your advice would be appreciated.

Jazzking

Hi Sandra,

They can only do a "credit search" with your name and address(es) for the past three years, and usually details of your current bank account. The sites where you type in your income into a calculator to find out how much you can borrow aren't doing searches, they are just estimating your limit based on your earnings.

However, as Fairdo posted in a separate thread yesterday, the HBOS group can provide a more accurate guess of how much they will lend you without doing a credit search.

Hope that helps,
Alex