How do search footprints affect my credit rating?
What is a search footprint?
When applying for a loan or credit card application and the lender runs a credit check on your account, they will leave a mark on your credit file as a record that they have checked your file and this is known as a ‘search footprint.’
This is a way of hypothetically saying that the lender has stepped inside your credit file and looked at your payment history for other loans, how much credit you have open, your electoral role status and whether you have had an IVA, CCJ or been declared bankrupt.
When applying for guarantor loans, a credit check will by carried out by the lender you choose on both your account and your guarantor’s account – and the lender will use this information when deciding if you are eligible for a loan and how much you can borrow.
The loan provider can only access your credit history by paying a few pounds from a UK credit reference agencies such as Experian, Equifax and Call Credit – as they hold the data. As all lenders must use one of these 3 agencies and if a search footprint is made, the information will always be updated on the customer’s file, so the most up-to-date information is available for all future lenders to see.
Why its bad to have too many footprints on your credit file
Whilst having search footprints on your account will not negatively impact your credit score, it may affect your chances of being approved for credit.
Having too many footprints on your credit file is not ideal because it looks like you have been aggressively trying to borrow money in a short space of time – and are therefore desperate for funds. Whilst guarantor loans are used for emergency purposes such as paying for urgent home repairs or medical bills, it is never a good sign if someone is making numerous applications quickly.
Some lenders will think it is not worth lending to you on this basis, because you seem desperate and therefore may not be able to repay the loan on time.
In fact, several searches within an hour or two may indicate possible fraud if someone has stolen your card details and is trying to apply for money wherever they can.
It is normal to have around 12 searches on your file per year but even if you have too few searches per year, lenders may think that you are not very credit active and there may not be enough financial history for them to feel confident to lend to you (common for very young people with little credit history).
The fact that having too many searches can impact your chances of being funded for much needed finance is one of the reasons that we don’t feature brokers on our website. Previously, there were several loan brokers online, particularly in the payday loan industry. Borrowers would be encouraged to enter their details into an application engine which was reviewed by several lenders at once, hoping that one would eventually accept the individual’s criteria. But whilst their details were being assessed, they could potentially rack up lots of credit searches on their file within seconds, only damaging their chances of getting a loan. Especially since payday loans are considered as high-cost short term (HCST) loans and have several of these searches, doesn’t look great.
For this reason, amongst others, we are pleased to only recommend guarantor loan direct lenders because they will only make one search footprint on your account when you apply, which won’t have any negative impact to your credit score.
How long does a search stay on your credit file?
According to Equifax:
- A basic application or quotation will create a search footprint and stay on the individual’s file for 12 months
- A debt collection search will last 2 years
- A fully funded loan, whether defaulted or paid in full, will last 6 years.
What is a hard footprint vs a soft footprint?
There are two kinds of search footprints: hard and soft.
A hard footprint is a thorough credit search that stays on the main applicant’s account for up to 12 months when they make an application for loans or credit.
This is different to a soft footprint which might be made on the spouse or partner of the main borrower, perhaps because they have a joint bank account or mortgage.
By doing a soft search, the lender can still get a good idea of their financial situation and if for instance, they find that the applicant’s partner is in a lot of debt, it is certainly useful information. It means that they might actually be applying on their partner’s behalf or if their spouse has debt, they may have extra costs to cover them.
It is considered ‘soft’ because it disappears instantly from the person’s file and won’t affect how they get approved for future credit – which is fair considering they never actually applied for the loan in the first place.
How you can access this information
There are several companies that offer this information so you can check your credit file including credit reference agencies and sites like Noddle and Checkmyfile.
Some of them offer free trials for up to 14 days, or a one-off fee of £2 if you want a full report or a monthly membership of a couple of pounds. You can find sites with free trials here.
By having access to your file, you can see how many search footprints you have at any point and determine whether this is affecting you getting approved for loans. Particularly for fraud purposes, you will receive alerts by phone or email if there is any suspicious activity on your affect, so it is very useful.
You will also be able to see your credit score which is essential when applying for loans, credit cards or mortgages. So if you are using different methods to improve your credit score such as trying to repay your loans on time or using a credit builder credit card, you can monitor your progress accordingly.