What is a credit search footprint?
When it comes to applying through mortgages brokers, direct payday lenders, or a credit or store card, we are all fairly familiar with terms such as whether or not we have a good or bad credit score, and what a credit check. But when it comes to a credit search footprint? Many of us are not so keenly aware of what exactly this entails or means. In fact, it is actually very closely connected with credit scores and credit checks.
Here we provide an overview as to what a credit search footprint actually is, the different types of credit search footprint available, and what this means for you.
What a credit search footprint involves
Simply put, whenever a lender, debt collector or loan provider checks your credit file they leave a so-called ‘footprint’ on your report, which indicates to you, and to others that they have looked at your record, and provides easy confirmation of having done so. The concept is still fairly new, hence there is a lack of awareness as to what a credit search footprint entails.
Whenever lenders do a credit check on your account, your personal financial information is provided by one of the three main credit references agencies: Equifax, Experian and Call Credit. The information that lenders or loan providers will be able to see in the report includes:
- Your full name and date of birth
- Your current address and previous addresses you have lived at, obtained through the electoral register
- Any outstanding debt you have
- Any CCJ’s that you have, or if you are bankrupt
- Your current account overdraft
- Any loans, credit card or mortgage accounts that you have currently open, as well as any loan amounts.
- Any accounts you have closed in the past six years will also be available on the credit report
- Joint mortgages or bank accounts that you have open with a spouse or family member
- If you have any missed repayments, and it will also include how many times you have missed them
- Any previous applications you have made and other credit search footprints on your account
Why do a credit check?
Lenders or loan providers will carry out a credit check, and thus leave a credit search footprint, in order to determine just how creditworthy you are. This is because they will be able to view the entirety of your personal financial information, whether you have been prompt with repayments or not, and how much money you currently have loaned. This information enables them to determine whether they will accept or decline your application.
How long do credit search footprints last?
According to one of the main credit references agencies, Equifax, there are different lengths of time in which a credit search footprint remains visible on your credit file. On average, a search is:
- Roughly a year if you have made a credit application
- Up to two years for searches made by debt collectors
- Up to six years for fully funded credit searches
It is also important to remember that whether or not you are successful with the application for credit you have made, the credit search footprint will remain on your credit record for at least an entire year. In addition, if the loan is approved or a credit card application is agreed upon, the complete history of the account will be left via a credit footprint. This means if you pay on time, or default and miss repayments, these will all remain on your credit file.
Types of credit search footprints
Did you know that there are two categories of credit search footprints? Let’s break the two down – hard and soft credit search footprints.
Hard credit search footprints
A hard credit search footprint means that it stays on your credit file for at least 12 months. This type of footprint is most common with applications for mainstream finances, such as credit cards, loans and mortgages.
Soft credit search footprints
A soft credit search footprint involves lenders or loan providers looking at your credit file, much like they would with a credit search footprint, however, they do not a long-term impact on your credit record. This means that any soft search footprint does not have a huge effect on your credit score.
A soft search may also be carried out on an applicant who shares a joint account with a spouse or relative, and they are applying for credit or vice versa. This is to make sure that you are both creditworthy, and have a history free from missed repayments and defaults.
Are credit search footprints a good thing?
Generally speaking, there is nothing wrong with having credit search footprints on your credit file. In fact, credit reference agency Equifax states that is is normal to have up to twelve credit search footprint on your record on a yearly basis.
Nevertheless, having considerably more than that can work against you, and may affect your chance of being accepted for an application for a loan or credit. This is because numerous search footprints tend to ring alarm bells for lenders. It could suggest a number of things including that you are desperate for cash and are in financial difficulty (which may mean you won’t be able to keep up with repayments) or it may appear to lenders you have been a victim of fraud if many applications are made simultaneously, and therefore applications may be declined on that assumption.
In order to keep your credit search footprints reasonably low, and therefore keep a good credit score it is definitely worth spreading out any applications for credit that you make. Making them all at once is one of the worst decisions that you could make that could increase your credit search footprint unnecessarily and dramatically. Wait for a response from each company you apply a loan for until you decide to move onto the next one.
If you want to check just how many credit search footprints you have, this can be easily done online, through companies such as Experian or Checkmyfile.