It is designed to inform members about the different types of credit search used by lenders in the mortgage process and also looks at how these might affect a customer’s ability to obtain credit in the future.
The factsheet covers how credit searches work including what information is held by the credit reference agencies and what it is used for. It also highlights the differences between ‘soft’ and ‘hard’ footprints left on a customer’s credit file by lenders, the impact both could have and the visibility of each type of footprint to those who conduct further searches.
Other areas under review include: a look at the Financial Services Authority’s requirements with regard to repeated credit searches; information on how intermediaries should inform their customers about this issue; AMI also answers what it anticipates will be frequently asked questions.
Rob Griffiths, associate director of AMI, said: “With lenders increasingly moving towards online decisions and sophisticated product offerings for those with impaired credit records, credit searches are now often carried out earlier in the mortgage process. Intermediaries need to be aware when a credit search will be carried out and which type of search the lender will undertake before requesting a decision-in-principle (DIP) or submitting a client’s application for a particular mortgage scheme.
“This factsheet provides AMI members with information on the impact a ‘soft’ or ‘hard’ footprint will have on a customer’s credit file, especially multiple footprints made in a short space of time. Intermediaries should make sure they have clear information from lenders on their credit search process and the footprint that will be left.”
