As consumers we are hard-wired to look for the best price possible. Whether it’s pestering the car dealership to throw in floor mats with the new car we want or circling grocery specials n the Coles catalogue, we all want the best deals we can get. It forms the basic cornerstone of day-to-day economics. However, lenders are saying if you dare to shop-around to check if there is a better loan deal out there, you will potentially be persecuted. 

What’s all the hype about the credit enquiries I make on my credit file, and why should I care ? I’ve never had trouble getting finance, are they telling me I can’t shop around?

In our current world of internet shopping and searching for the best deals on everything, it may seem counter-intuitive that looking for the best deal can be interpreted as a negative thing.

Every time you apply for credit and a credit provider obtains a copy of your report, an enquiry is added to your credit report. This includes any loan, mortgage or utilities applications you may make. Credit providers may take a negative view of a relatively high number of enquiries made in a short space of time, which may in turn affect your ability to obtain credit.

When you apply online for the special interest rate advertised in Saturday’s paper, uploading your personal details into a financier’s website and getting an answer back in 60 seconds for that low interest credit card balance transfer is having a computer access your credit file, put an enquiry on it, get your ‘score’ and then having the computer use the score and the strengths and weaknesses of your application to decide if you get the green light or not. 

Lenders and credit providers will look at your credit enquiry history from a number of perspectives;

• How many times you have enquired or applied for credit according to your credit file; your credit file will show this information for the last 5 years.
• How many times you have enquired or applied for credit in the past 12 months. This is the specific measure that will affect your credit score, with anything more than 3 to 5 enquiries or applications in the last year likely to have a negative impact.
• How many lenders you have enquired or applied to; known as your ‘credit shopping pattern.’

To ensure you achieve the highest possible level of benefit from this aspect of credit scoring, you should limit your credit applications, as well as the sources you apply to.

Use a professional finance broker for your finance applications and put your broker to the test. Ask them where they want to send your loan application and why. If they can’t give you an exact reason why your loan will fit the particular lender they choose then they haven’t done their research, and you could be one step closer to a busy credit file, and two steps closer to not getting the best deal that you deserve….or even worse a rejection due to your credit file being too busy.

Good brokers know the credit buying criteria’s intimately. It is not a magic trick. Chose the right broker and the best credit deal for you will soon follow. 

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