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| Version 1 | Version 2 |
|---|---|
| Websites 'may hurt credit scores' | Websites 'may hurt credit scores' |
| (10 minutes later) | |
| People who repeatedly use financial comparison websites may inadvertently damage their credit rating, a report has said. | |
| Comparison websites have sold 13.6 million products in the past year. | Comparison websites have sold 13.6 million products in the past year. |
| But the report, by Professor Merlin Stone of Bristol Business School, says numerous applications lead to checks that can lower the credit rating. | |
| This can happen regardless of whether the application is successful or is turned down. | This can happen regardless of whether the application is successful or is turned down. |
| "Many people apply for products they will not be approved for and are left with applications on their credit scores," said Professor Stone. | "Many people apply for products they will not be approved for and are left with applications on their credit scores," said Professor Stone. |
| His report was commissioned by the Moneyexpert comparison site. | His report was commissioned by the Moneyexpert comparison site. |
| Both this and a similar service Moneysupermarket.com offer help to potential customers so they can check their existing credit scores before they apply for a loan. | Both this and a similar service Moneysupermarket.com offer help to potential customers so they can check their existing credit scores before they apply for a loan. |
| Footprint | Footprint |
| If you have too many of these applications on your file in a short period of time, a lot of the ratings systems... will probably downgrade your credit rating Neil Munro, Equifax | If you have too many of these applications on your file in a short period of time, a lot of the ratings systems... will probably downgrade your credit rating Neil Munro, Equifax |
| Professor Stone argues that the problem lies with the fact that some comparison websites assume all potential customers are the same and have good credit histories. | |
| If someone eventually applies for a product such as a mortgage or credit card, the lender checks their credit history. | If someone eventually applies for a product such as a mortgage or credit card, the lender checks their credit history. |
| This enquiry is logged and thus leaves a "footprint" on the files kept by credit scoring companies such as Experian and Equifax. | This enquiry is logged and thus leaves a "footprint" on the files kept by credit scoring companies such as Experian and Equifax. |
| Equifax's spokesman Neil Munro said: "These footprints are used by future lenders as an indication of your credit-worthiness. | Equifax's spokesman Neil Munro said: "These footprints are used by future lenders as an indication of your credit-worthiness. |
| "So if you have too many of these applications on your file in a short period of time, a lot of the ratings systems the lenders will use will probably downgrade your credit rating. | "So if you have too many of these applications on your file in a short period of time, a lot of the ratings systems the lenders will use will probably downgrade your credit rating. |
| "A large number of applications over a short period of time is statistically quite predictive of somebody's credit worthiness." | "A large number of applications over a short period of time is statistically quite predictive of somebody's credit worthiness." |
| According to Moneyexpert, about 3.5 million people had applications for financial products rejected in the past year after being channelled through comparison sites. | According to Moneyexpert, about 3.5 million people had applications for financial products rejected in the past year after being channelled through comparison sites. |
| This process can develop into a spiral, with failed applicants trying again and again to buy polices or products they have no hope of getting, but simply leaving themselves with a worse credit score each time. | This process can develop into a spiral, with failed applicants trying again and again to buy polices or products they have no hope of getting, but simply leaving themselves with a worse credit score each time. |
| Credit histories | Credit histories |
| What many people fail to realise is that it is not just events such as failed mortgage or credit card repayments, or county court judgements for debt, that can damage a credit score. | What many people fail to realise is that it is not just events such as failed mortgage or credit card repayments, or county court judgements for debt, that can damage a credit score. |
| People with healthy finances can have a poor score if, for instance, they have been in a job for a short time, are not on the electoral roll, or do not have a fixed phone line. | People with healthy finances can have a poor score if, for instance, they have been in a job for a short time, are not on the electoral roll, or do not have a fixed phone line. |
| You can have a poor score even if you have never borrowed money before simply because you have no identifiable borrowing history. | You can have a poor score even if you have never borrowed money before simply because you have no identifiable borrowing history. |
| The use of comparison web sites has grown rapidly over the last few years and is still continuing to grow. | The use of comparison web sites has grown rapidly over the last few years and is still continuing to grow. |
| The most popular products bought were car insurance, travel insurance and home insurance. | The most popular products bought were car insurance, travel insurance and home insurance. |
| Credit cards, personal loans and mortgages were the next most popular items. | Credit cards, personal loans and mortgages were the next most popular items. |