How Price Comparison Sites Can Damage Your Credit Rating
How Price Comparison Sites Can Damage Your Credit Rating
How Price Comparison Sites Can Damage Your Credit Rating
Free Online Articles Directory
Why Submit Articles?
Top Authors
Top Articles
FAQ
ABAnswers
0 && $.browser.msie ) {
var ie_version = parseInt($.browser.version);
if(ie_version Login
Register
Hello
My Home
Sign Out
Email
Password
Remember me?
Lost Password?
Home Page > Finance > Credit > How Price Comparison Sites Can Damage Your Credit Rating
How Price Comparison Sites Can Damage Your Credit Rating
Posted: Aug 11, 2010 |Comments: 0
|
]]>
There can be no doubting that comparison sites have revolutionised the financial industry. Market transparency has never been greater for the consumer, and up until the recent recession, choice has been vast. However, these sites are not taking enough measures to ensure that consumers fully understand the consequences of making multiple credit applications.
Most consumers do not realise that being declined for a loan leaves a footprint on their credit file, which on its own, might not be a huge cause for concern. However, making multiple applications and being declined over a short period, can be detrimental as it will raise a red flag to other potential lenders that the consumer is in difficulty. This could ultimately mean that the consumer is declined for a loan, which they might otherwise have been accepted for, had they applied there first.
This is where the price comparison sites let the consumer down, because they encourage people to apply for the loan with the lowest interest rate. Lenders however, will lend at an interest rate related to the credit score of the individual applicant – this is known as “rate to risk”. Basically the higher the perceived risk to the lender i.e. the worse their credit score, the higher the interest rate they will charge. Conversely the lower the risk to the lender i.e. the better the credit score, the lower the interest rate they will charge.
However, the very best rates are given to less than 5% of the population, who have pristine credit ratings, with the majority of consumers being offered a much higher rate or being declined, depending on the lenders policy.
In many cases the consumer will be put off by what he/she thinks is too high a rate compared to the one that attracted them in the first place. They will be offered the best rate for their credit circumstances but this could be 8% or higher than they were expecting causing them to turn it down. However, the damage has already been done by then because the lender will have carried out a credit search leaving a footprint on the credit file. An unknowing consumer will however, simply apply for the next best rate only to reach the same conclusion, causing further damage.
This phenomenon, has been christened “rate rage” i.e. the frustration at being turned down for the best rates displayed for secured loans and personal loans on comparison sites because of previous multiple applications.
There must be justifiable reasons for these sites to present best buy deals to consumers when a simple interrogation of the prospective lender’s criteria would suggest that the risk-to-rate calculation simply does not equate, avoiding an unnecessary credit granting footprint.
It is often misunderstood that one generic footprint is left each time a third party views a consumer’s credit file. However, the three credit bureaus in the UK (Experian, Equifax and Callcredit) are obliged to leave an assortment of footprints on consumers’ credit files for varying reasons. One such example is an anti-money laundering (AML) footprint as required by the Joint Money Laundering Steering Group Guidelines 5.3.33. This AML footprint does not have a detrimental effect on an individual’s credit score/rating however, the footprint type left when searching for the purposes of credit granting are factored into lenders’ criteria. Hence, accumulating them is disadvantageous to one’s credit score.
Due to the stoozing or rate tart phenomenon, multiple credit footprints did become less of a concern in lenders’ scoring mechanisms. However, with the recession taking grip and its full ramifications yet to be felt, the gathering of footprints over short periods of time is again being viewed as a sign of financial stress. Therefore one has to question the responsibility of these comparison sites and their goal of treating customers fairly.
There is a greater need for comparison sites to be fully accountable to the consumer when applying for loans.
Retrieved from “http://www.articlesbase.com/credit-articles/how-price-comparison-sites-can-damage-your-credit-rating-3015711.html”
(ArticlesBase SC #3015711)
Submit articles to Articlesbase.com, and watch your traffic increase. Click here to make it happen.
Liked this article? Click here to publish it on your website or blog, it’s free and easy!
Fraser Mitchell -
About the Author:
Fraser Mitchell writes for www.creditjungle.co.uk which is a new generation of financial services website which matches Borrowers to Lenders based on the individuals’ credit scores finding the best loan for their credit circumstance without leaving detrimental credit footprints.
]]>
Questions and Answers
Ask our experts your Credit related questions here…
200 Characters left
What is a good price comparison / affiliate software out there?
Does the goverment’s new dept relief program negatively impact your credit rating?
Does moving house affect credit rating ?
Rate this Article
vote(s)
0 vote(s)
Feedback
RSS
Print
Email
Re-Publish
Article Tags:
price comparison sites, credit rating, rate rage, credit granting footprints
Latest Credit Articles
More from Fraser Mitchell
How to Improve Your Credit Rating
This video by TV360 offers you expert advice on improving your credit rating and credit history. (00:52)
How Our Credit Ratings Have Performed in 2010
Morningstar’s Brian Nelson reviews the performance of our corporate credit ratings on their one-year anniversary of their launch, plus two health-care bond picks. (06:57)
Know your Consumer Rights – Improve your Credit Rating, Credit Score, or Cr
Learn to improve your credit report, credit score, credit rating by knowing your consumer rights (04:06)
How to Get a Car Loan with a Low Credit Rating
Kiplinger’s financial experts show you ways you can get a car loan with a low credit rating. (01:50)
How to Apply for a Home Loan with Bad Credit
This video by TV360 offers you expert advice on applying for a home loan when you have a bad credit rating. (01:03)
Check Personal Credit Report From All 3 Bureaus For Free Periodically
What that means is that you can obtain a personal credit report for free from all the 3 major credit bureaus at anytime.
By:
Humaun Alitafl
Experian US – Rent Data Now in Credit Reports
Experian recently purchased Rent Bureau in the US, one of the largest rent payment database companies in the US. Experian has begun to include rent payment data in its consumer credit reports
By:
Edwardl
Don’t Lose Your Dream House? Top Tips to Improve Your Credit Report Before Applying for a Mortgage
This article investigates key steps that need to be taken before applying for a mortgage. In the current financial environment lenders are very strict with their criteria and credit scoring. Before applying for a mortgage, it is vital to get your credit report into shape, to give yourself the best chance of being accepted.
By:
Edwardl
Is Credit Card Debt Settlement Possible?
So you are behind on your credit card payments? The last few months have been financially tough for you and using the credit card was a necessity to keep afloat. If this sounds like your situation, you are among many with the same problem. The economy is tough and many have lost their jobs throughout the country.
By:
Mike Richaldsl
Legally Get Rid Of Credit Card Debt
If you are burdened by excessive consumer debt, then you may feel like trying anything to get out of it. There are many companies who offer you their services to reduce or get rid of your debt. However, some companies are not legitimate, and may even practice methods that are illegal. How to get rid of credit card debt legally is a question worth asking.
By:
Mike Richaldsl
Eliminating Credit Card Debt Legally
Does it feel like a swirling vortex has opened up at your feet as you stare at the credit card bills that you know you cannot make payments on this month? If you have thousands of dollars in credit card debt, and your ability to pay is limited, you should know how to eliminate credit card debt legally.
By:
Mike Richaldsl
Options To Help Erase Credit Card Debt
If you are tired of constantly paying on credit card purchases that you hardly remember, or if your bills are so out of control that you are delinquent, then you may want to know what options you have to erase credit card debt.
By:
Mike Richaldsl
Co-branding as a market strategy
Co-branding is a market strategy that makes immense sense – Two or more famous brands, usually with unconnected production or marketing activities. The idea is to create a burgeoning atmosphere that enables growth of all the parties concerned. You can also call it brand partnership. A marketing synergy thus created can go a long way in furthering the goals of the companies.
By:
raml
This article is a review of payday loans and the payday lending industry. It aims to provide a balanced look at the reasons people take out this type of credit and whether or not there is a place for it in society given the high interest rates.
By:
Fraser Mitchelll
Which Debt Management Solution Is Best For You?
This article gives an overview of the type of debt management solutions available. It is not meant to be a comprehensive overview of each of the options, but to explain the main criteria for each and the potential advantages and disadvantages of each one. You should always seek advice from a debt management professional as the best solution for you will depend on your specific circumstances.
By:
Fraser Mitchelll
Secured Versus Unsecured Loans
An explanation of how the current lending market is affecting the unsecured lending market and why if possible a secured loan might be the better option.
By:
Fraser Mitchelll
Add new Comment
Your Name: *
Your Email:
Comment Body: *
Verification code:*
* Required fields
Submit
Your Articles Here
It’s Free and easy
Sign Up Today
Author Navigation
My Home
Publish Article
View/Edit Articles
View/Edit Q&A
Edit your Account
Manage Authors
Statistics Page
Personal RSS Builder
My Home
Edit your Account
Update Profile
View/Edit Q&A
Publish Article
Author Box
Fraser Mitchell has 4 articles online
Articles Categories
All Categories
Advertising
Arts & Entertainment
Automotive
Beauty
Business
Careers
Computers
Education
Finance
Food and Beverage
Health
Hobbies
Home and Family
Home Improvement
Internet
Law
Marketing
News and Society
Relationships
Self Improvement
Shopping
Spirituality
Sports and Fitness
Technology
Travel
Writing
Accounting
Banking
Credit
Currency Trading
Day Trading
Debt Consolidation
Insurance
Investing
Loans
Mortgage
Personal Finance
Real Estate
Taxes
Wealth Building
]]>
Need Help?
Contact Us
FAQ
Submit Articles
Editorial Guidelines
Blog
Site Links
Recent Articles
Top Authors
Top Articles
Find Articles
Site Map
Mobile Version
Webmasters
RSS Builder
RSS
Link to Us
Business Info
Advertising
Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2011 Free Articles by ArticlesBase.com, All rights reserved.
Fraser Mitchell writes for www.creditjungle.co.uk which is a new generation of financial services website which matches Borrowers to Lenders based on the individuals’ credit scores finding the best loan for their credit circumstance without leaving detrimental credit footprints.
March 17, 2011 by admin under 
Credit Rating ArticlesTags: Comparison, Credit, Damage, Price, Rating, Sites
Feel free to leave a reply...