Stuart Glendinning, MD, Money Channels

Moneysupermarket's campaign for fairer credit quotations....

Whenever you apply for a loan or other form of credit, the provider will check your personal credit score before they decide whether or not to lend you the money. Your credit record shows things like whether you've missed any payments in the past, where you live, how many types of credit you've applied for in the past and how many you were refused for. All these things and more can have a factor on how 'risky' a provider thinks you might be, but a general rule of thumb is that the more credit you apply for, the lower your credit score is likely to be.

But there's currently a problem. There are occasions when you might apply for a loan at, say, 6.5 per cent and only be offered that loan at a higher rate say 7.2 per cent. This is because the low headline rate advertised is only available to customers with really squeaky clean credit ratings, and you might not qualify. But because of the way the market operates at the moment, that application will leave a 'footprint' on your credit rating before you know the rate you are being offered, regardless of whether or not you accept. You might decide not to take it at this new higher rate, but you'll still suffer from the fact that that application remains on your credit score. The footprint will mean you become more of a risk to other providers, which could make it even more difficult to be accepted by credit providers in future and may mean you won't be offered the best rates.

At moneysupermarket.com we don't think this is right, and we're campaigning hard on your behalf to get this changed. Our SmartSearch tool already gives you the option of searching for credit products you're likely to be accepted for and at what rate - without leaving any traces behind before you accept. We now want to take this further and lobby credit providers to play fair with their customers.

Relevant Links