Why shopping around for credit can damage your credit score
We’re always being told to shop around to get the best deal, but it may leave a ‘footprint’ on your credit file. And that could be bad news.
How do you get the best deal on a credit card, loan or insurance? If you’re like most people, you probably look at a couple of price comparison sites or ring companies direct to get quotes before you buy. Great in theory, but the problem is that you might not realise that the credit card company or loan provider may carry out a credit search against you. In many cases, lenders should use a type of credit search that won’t harm your credit score, but there’s evidence they’re not doing this all the time.
The Office of Fair Trading has launched a study into tactics used by price comparison sites
Price comparison sites are a multi-million pound industry, but the OFT is concerned that some consumers may be misled
Price comparison sites have revolutionised the way we shop around for financial products – like credit cards and car insurance – and household items, such as TVs and washing machines. And there’s no doubt they’ve made the process of comparing different products much quicker and easier. But there has been some concern that consumers may be being misled; especially by sites that quote a low headline-grabbing upfront price, only to add on lots of extras before you pay.
An easy way to save money if you have a credit card debt is to transfer to a 0% deal. But you’ll need a good credit record to do it.
Unless you study your credit card statement carefully, you may not realise how much interest you’re paying each month. But it can add up to hundreds of pounds over the course of a year. Since the credit crunch, it’s not so easy to be a ‘rate tart’ and chase the best deal, but it's worth doing from time to time if you’re paying a high rate of interest. If you carry a balance on your credit card that you know you’re not going to be able to pay off in the next two or three months, it’s probably worth looking for a 0% deal.
