Get The Best Loan, Don’t Hurt Your Credit Score

We reported last week that many loan providers are putting black marks against people’s credit score if they apply for a loan but then do not follow through and take the loan that was offered – the kind of basic “shopping around” that many savvy consumers do. (This does not apply to pension loans, as they do not require a credit check). On Friday, The Guardian gave some tips for people who want to shop around, without their credit record being hit –

“[S]everal banks and lenders, including TSB, will give applicants a personalised quote without affecting their credit record by using a so-called “soft search”. If they don’t like the look of the rate, they can go off and try somewhere else. Soft searches can’t be seen by lenders, so you can do it as much as you want… Kevin Mountford, banking expert at – one of the sites where searching won’t harm your credit score – says the biggest issue is that no one really knows the extent of the problem. With many lenders, their terms and conditions mean that by asking for a quote, a consumer is in effect giving the lender permission to carry out a hard check, he adds… Guardian Money found that some websites weren’t at all clear about whether an application would have any impact on someone’s credit file.”

They point out that most comparison websites will not check your credit score when you are just comparing possible rates, at the start of your process.