MPs are set to launch an enquiry into how credit checks can have an adverse affect on borrowers’ abilities to get hold of secured and unsecured debt.

The Treasury select committee is calling on the credit industry to help solve the problems of credit checks – also known as ‘footprints’, a credit check appears on a borrower’s permanent credit rating and can hinder their chances of getting hold of much needed credit.

Whenever a person applies for a loan, the lender will check their credit score to see whether they are a good borrower. If that person is turned down, they check remains on the score, like a footprint. This can be seen by other lenders in the future, and can set alarm bells ringing – someone who has tried, and failed to get hold of credit in the past might not be a good bet for credit in the future.

So MPs will look into the issue and see whether it is adversely affecting people who have tried to get hold of much-needed finance in the past.

James Caldwell, director at Fairinvestment.co.uk says: “It’s high time that something was done about the fact that every time someone applies for a credit card or loan, it can leave a black mark on their credit report. This restricts a consumer’s access to cheaper credit in the future, and is a deterrent to shopping around.

“Consumers should be able to see what credit and rates are available to them without having to make a full application which can harm their chances of getting credit elsewhere if they are refused. Comparing the market is instrumental in finding the best deals, so anything that might encourage this is welcome news.”

In the meantime, if you are worried about the state of your credit score, get it checked. Talk to a professional financial adviser about your credit situation and your ability to get hold of finance.

SOURCE: HM Treasury, Fairinvestment.co.uk, 22/09/09

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