Debtors neglect simple check that could protect their credit scores

New research from Experian suggests that more than half of loan applicants are unknowingly damaging their credit score by applying for products they aren’t eligible for. For some applicants simply checking eligibility in advance could prevent this problem and potentially open up more finance options.

Problematic process

Credit checkers Experian surveyed 1,500 UK adults and found that 55% had never checked their eligibility for a loan, credit card or mortgage before applying. This is a problem because every application results in a “hard search” being recorded on their credit history. Having too many of these hard searches on record can lead to a lower credit score, which means less chance of being offered a good deal on loans and other finance products.

When applicants check their loan eligibility in advance, this counts as a “soft search”. Checking will not only show which loans, mortgages and credit cards loan applicant can access, but it will also prevent another hard search appearing on their credit history.

Common misunderstanding

The reasons for neglecting these eligibility checks vary, but are often related to financial awareness and education. 23% of people told Experian that they didn’t know about the benefits of checking eligibility before applying, and 20% even thought that checking their eligibility in advance would hurt their credit score.

This misconception appears to be more common among older applicants. While just 25% of 25 to 34 year olds have never checked their eligibility for loan products, the figure rises to 75% among over 55s.

Simple fix

When you’re looking for financial products like loans or credit cards, make sure that any comparison tools you use will only conduct a soft search. Credit check companies like Experian also have free eligibility checker tools that can help you find a product, avoid hard searches and avoid rejection.

In the long term, it’s also wise to keep an eye on your credit score and the factors that affect it. That means accessing free credit reports from firms like Noddle or ClearScore, and looking for ways to improve your credit rating, whether it’s by keeping your contact details up to date, or making debt repayments on time.

If you’ve received an enforcement notice from Dukes and want to make a payment or discuss affordable repayment plans, contact our team today.