Enquiry listings on credit files are a BIG. RED. FLAG. to lenders.
I had a customer recently who had 23 of these credit score-destroying marks on her credit file. The amount of loans she could get? ZERO.
What is an enquiry listing? An enquiry listing is put on your credit file each time you apply for finance. The enquiry listing could be placed by a big bank, credit union, car finance company, credit card company, telecommunications company – the list is endless.
Why do these companies put enquiry listings on your credit file? They do it because when you apply for a loan online or in person, you are asked to tick a box or sign that your credit file can be accessed. The reason they want to access your file is to see if you are going to be a good loan prospect. And every time you sign or check that box an enquiry listing will appear on your credit file.
It's no wonder consumers are dazed and confused about this being a problem because we are encouraged to ‘shop around’ for virtually everything. Want a fridge? Well, you better check out your competitors and beat the lowest one down in price – this is the kind of mentality in a competitive marketplace. And we do the same with finance.
The online world we inhabit gives us, at our fingertips, access to real live competitive interest rate information as well as numerous benefits for jumping ship from your current lender to a new one.
One or two credit enquiries per year on your file won’t affect your score too much but when it looks like you are shopping around for loans and failing, it is then that your score will take a big hit.
So, if you are seeking finance and are tempted to make multiple applications to multiple lenders at the same time, you should resist the urge. It’s better to make one application, and if it fails, seek to find out why. If it’s an issue with your credit file there are excellent companies that can assist with the removal defaults, court actions and other adverse information.
Credit repair companies can also remove fraudulent or duplicate enquiry listings. But we can't help with multiple enquiry listings because in almost every case the consumer has signed or ticked the box that gave the lender permission to access the credit file and place the enquiry listing on there. So prevention is better than cure.
Dr Merrilyn Mansfield is a consumer advocate at Princeville Credit Advocates.