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Consumers repeatedly using financial comparison websites may be damaging their
credit rating, a report claims.
The report, by Professor Merlin Stone of Bristol Business School, says numerous
applications lead to checks that can lower credit ratings.
This can happen regardless of whether the application is successful or is turned
down.
If someone eventually applies for a product such as a mortgage or credit card,
the lender checks their credit history.
The enquiry is logged, leaving a "footprint" on the files kept by credit scoring
companies.
Professor Stone explained: "Many people apply for products they will not be
approved for and are left with applications on their credit scores," said
Professor Stone.
Thes 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.
Neil Munro of Equifax commented: "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."
About 3.5 million consumers had applications for
financial products rejected in the past year after being channelled through
comparison sites.
Source:
Getting Paid
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