Each time you apply for some form of credit, be it a loan or a credit card application, lenders are obliged to run a credit check. This leaves something known as a ‘search footprint’ which shows that your file has been checked by a lender, particularly in areas such as payment history, the credit you currently have with other lenders, your status on the electoral role and if you have been declared bankrupt.
How does this affect you when applying for our a guarantor loan?
Well when you apply for such a loan, the lending company will now apply checks to both you as well as the guarantor. This helps them to decide whether you are eligible for a loan and if so, exactly how much money you can borrow. This information on your credit file is always up to date, providing the lending company with the most accurate information at all times.
Can too many search footprints be a bad thing to have on my credit file?
Let’s just get one thing straight. A search footprint does not in any way affect your credit score. However, too many of them can affect your chances of securing credit in one form or another, be it a loan or even a credit card.
Well, too many search footprints, especially in quick succession, make it seem like you are desperate to borrow money. Now in some cases, such as an emergency, you maybe, but if you are turned down, rather wait a few months before trying to secure credit elsewhere.
Numerous search footprints right after each other are seen by lenders as awarning sign and they worry particularly about whether you will pay the loan instalments back. Aim for around 12 search footprints every year as these numbers are considered to be normal. In fact, too few searches could be a problem as well as they indicate that you do not have a very active credit history, another reason why a lender might not give you a loan. It really is a fine line that you need to balance on!
There are a few other considerations to bear in mind when it comes to your credit file.
- Applications or quotations will stay on your file for 12 months.
- If any lender has searched regarding debt collection, their search details are active for 2 years.
- Records for fully paid off or defaulted loans have search footprints that reside on your record for 6 years.
‘Hard’ v ‘Soft’ search footprints
We have discussed ‘hard’ search footprints in great detail so far in this blog. They are the searches applied to the person wanting to apply for acredit product. ‘Soft’ searches are slightly different. This is usually applied to the partner/spouse of the person applying for the loan, especially if they have a joint mortgage. It could also be applied to the person signing together on a guarantor loan. These searches disappear instantly from the secondary party’s record.
Can I access this kind of information?
Credit reference agencies will allow you to check information on your credit file. These include Noddle and Checkmyfile. They initially offer a one-off free trial but if you need to check your credit file again in the future, you will need to pay.
By being able to see your credit file, you can help to manage your search footprints which can secure credit products in future. It can also be used to see if methods you are using to build your credit score are working.