Applying For Some Loans Gives Black Mark On Your Credit Record

Just applying for many types of loans can put a black mark on your credit score, if you don’t follow-through and take the loan. (NB. this does not apply to pension loans, where there is no credit check). Some of the UK’s biggest lenders are penalising people who apply but do not then take the loan that was offered to them. So, if you are shopping around for the best deal, and applying to several banks, you could end up with a significant hit against your credit score.

The Daily Mail reports

“This is because it looks like the customer is desperately applying for multiple loans rather than simply asking several companies for quotes before deciding on a deal… One estimate suggested the cost of the rip-off to customers is almost £400million a year… The claims are made in a damning report on its own industry by the bank TSB, which alleges the personal loans market is ‘broken’… It accuses ‘aggressive’ banks of burying crucial terms and conditions about exit penalties and overpayment fees… And it claims many banks refuse to tell customers what interest rate will be charged until after they have applied for the loan and undergone a full credit check… This leaves a black mark on their credit score before the borrower even knows the price of the loan and whether they want to go ahead with it.”