A Guide To Search Credit Footprints
A credit search footprint is a mark left by a lender or debt collector on your credit record every time they look at your account. It is a simple way to confirm that they have reviewed your credit report.
Running a credit check is an essential part of the guarantor loan application process. By reviewing your credit history, lenders are able to get an idea of your creditworthiness by seeing how well you have paid other types of credit in the past and if you have any loans or payments outstanding. This allows them to determine your eligibility for a loan and how much you are able to borrow.
For guarantor loans, it is not usually a necessity for the main borrower to have a good credit rating with several lenders willing to accept bad credit and some select lenders will even consider those with a history of bankruptcy, CCJs or IVAs. Above all, it is more important that the guarantor has a good credit score as they are the person who is required to make the payments if the main borrower defaults. It is based heavily on trust and the idea that if a guarantor with good credit is willing to ‘back you up’ then the lender can too.
How long do credit search footprints last for?
A search will be visible on an individual’s file for:
- 1 year for credit applications
- 2 years for debt collection searches
- 6 years for fully funded credit agreements
This shows that credit footprints are not exclusive for lenders but also debt collection companies. A footprint will be visible on an individual’s credit report for at least 12 months regardless of whether the application is successful or not. If the loan is approved, it will stay on file for as long as 6 years, whether it is paid on time, in default or arrangement.
The difference between soft and hard credit search footprints
A hard search footprint is one that stays on the applicant’s credit file for around 12 months and is common for applications for mainstream finance such as mortgages, credit cards and loans. So it is typical for a hard search to be made on the main person applying for a guarantor loan.
A soft search is where the lender reviews the individual’s credit score but it does not leave a long term mark or impact their credit score. Soft searches are common for comparison websites in insurance and loans that offer quotations and give customers the chance to get different prices without affecting their credit rating. In the case of guarantor loans, a soft search is usually made on the guarantor so that is vanishes soon after. After all, that person is doing someone a favour and is willing to assist with someone’s loan agreement, so there should not have a footprint added which could impact them in the future.
A soft search can also be made on an individual who has a joint account if the other person they share with is applying for credit. For instance, if you have a mortgage with your spouse and you apply for a loan, a soft search may be made on their account too to check that they do not have a history of defaults.
Is it bad to have too many search footprints?
By having too many search footprints on your account, it may have a negative impact on your credit score. The lender may therefore decide that the individual is not eligible for a loan because they may seem desperate for finance.
Equifax explains that it is normal to have around 12 credit search footprints a year but having too many raises warning signals for loan providers. Above all, certain searches like payday loans and also debt collection may suggest that the borrower is facing financial difficulty and therefore should not be granted a new loan.
In addition, having several footprints in short space of time may suggest that you have been victim of fraud as someone is trying to get a loan using your bank details.
Check how many search footprints you have
You can check how many search footprints you have by accessing your credit file from companies like Experian and Checkmyfile. There are several free trials available or you can pay £2 for a one-off statutory report or around £14.99 per month for regular access. For a paid subscription, you will receive an alert by email or text message every time a company leaves a search footprint or looks at your credit file, which could be an indication of a recent application or potential fraud.
How to improve your credit score
In our recent guide on how to improve your credit score, we explain that whilst making too many applications in a short space of time can be counterproductive, there are other ways to boost your score.
For instance, it is recommended to join the electoral roll because it is a way of verifying your name and address with the local council and proves to future credit providers that you are real person.
It is always advisable to pay your loans, bills and credit cards on time because your credit score can always go up and down and making consistent repayments will only help your score improve. If you cannot access a loan due to having poor credit, there are specific credit builder credit cards with higher rates if you default but at least they allow you to prove your creditworthiness if you pay on time.
Another key part of credit scoring is seeing how much debt you have open and how much you could ‘potentially borrow’ given your existing resources. Therefore, if you have lots of credit cards and store cards, potential lenders think that you could be a risk because you could potentially borrow £10k or £20k if need be (even though you may not be doing so). So it is important to cancel any cards that you do not use, especially those store cards from retailers and supermarket chains who make it so persuasive!