Calls For Changes To Credit Check System
When someone applies for a new personal loan, they can reasonably expect the lender or loan company to carry out a credit check on their financial situation and background before they offer the loan.
This credit check will leave a “footprint” on the individual’s credit rating, which shows that they have applied for a loan and had their details checked. This in itself is not a major problem for most people, however in these times where lenders are reluctant to offer personal loans and consumers are actively encouraged to shop around for the best deals, a potential borrower may have had several credit checks carried out on them before they obtain the loan they require and this can have a damaging effect on their overall credit rating, possibly stopping them from getting the loan they wanted in the first place.
The price comparison website, Moneysupermarket.com, has called on the Treasury Select Committee to investigate the current credit search system, claiming that it is unfair, lacks transparency and can cause damage to an individual’s credit rating without their knowledge. The company has proposed a new system which will allow consumers to search the market for an unsecured loan, without having multiple searches against their name.
According to Moneysupermarket.com, 46 per cent of consumers are unaware of the damage which may be caused to their credit rating by multiple searches and another 55 per cent believe the system to be unfair.
Toby Van Der Meer of moneysupermarket.com said “Shopping around for financial products is common and growing, with 40 per cent of consumers saying they do so. However, shopping around is becoming harder with acceptance rates being lower due to the recession and fear of tarnishing credit scores increasing.
We have asked the Treasury Select Committee to press for change in this market. We need greater transparency and fairness in the consumer credit market, with providers using quotation searches rather than full credit searches on applications, so consumers can shop around freely for products without any impact on their credit files.”
