Credit card applications 'could harm credit file'
Published On 18 October 2006
Multiple applications for a credit card could be harming your credit profile, according to a price comparison website.Moneysupermarket says that two million Britons are running this risk as every credit card application leaves a "footprint" on their credit file.
When the consumer then tries to apply for another credit card, the potential lender will look at the file and any "dents" could have a negative effect on the interest rate offered, Moneysupermarket warns.
Research by the website found that almost a quarter of consumers – or ten million Britons – have been denied a credit card.
Of those who have been accepted after multiple applications, one in five are likely to not qualify for the initial low rate for which they applied.
This could be a direct result of their multiple applications, says Moneysupermarket.
Robert Kenley, the website's head of credit cards, says Britons face "a bit of a gauntlet" in their dealings with lenders.
He says there could be various reasons for borrowers offered a higher interest rate by credit card providers.
However, Mr Kenley says it is often due to providers offering headline rates only to customers posing the lowest potential risk.
Multiple applicants with a poor credit record are likely to fall in the higher risk category.
"This can also impact on rates they may be offered on other financial products," he adds.
However, consumer credit is still a popular form of borrowing. A report by PriceWaterhouseCoopers found that in the first half of this decade, consumer credit has grown by ten per cent.
