What Footprint Have You Left on Your Credit File?

What Kind of Footprint is On Your Credit File?

Each time you apply for credit, you leave a footprint on your credit file. This allows lenders to view your past financial activities, other credit applications, payment defaults, judgements, bankruptcies, company directorships, simple credit enquiries and other items.

Based on the type of footprints you’ve left on your credit file, the lender will then make a decision whether or not to approve your credit application.

How Your Credit File Footprints Get There

Each time you apply for credit with a lender or bank, they place an enquiry listing on your credit file. If you miss payments on your loans or credit cards or utility bills, these may also be added to your credit file as an unpaid default. An unpaid default listing can be amended to read ‘paid default’ only after you’ve caught up any overdue payments and repaid any penalty fees and charges that may apply.

These listings remain on your file for 5 years.

How These Footprints Can Damage Your Credit File

While most people are aware that missed payments can be damaging to a credit report, what many people don’t know is that too many credit enquiries can be just as damaging.

If you make an enquiry about applying for credit using an Internet application, you’ll have a footprint listed on your credit file, even if you don’t accept the credit. The enquiry is still listed and the damage is done.

By the time you do complete your search for the right type of credit to suit you and make a real application, you may already have multiple enquiry listings on your credit report from those previous enquiries you made.

Lenders view multiple credit enquiries listed on a credit report as negative. To them, it means you’ve either been declined for finance from several lenders in the past, or that you’re shopping around for more and more credit. Either way, they see this as a major problem and are likely to score your credit application very low.

Be sure you protect yourself from falling victim to excessive credit enquiries showing on your credit report. Always check the terms and conditions on any website you’re enquiring with to see if they’ll add a listing to your credit file.

If you’re using a broker to apply for a loan, make sure you are shopping around and don’t want the enquiry listed until you’re ready to apply.

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