The Dangers Of Credit File Footprints
Wednesday, 6. January 2010
The House of Commons Treasury Select Committee has been looking into credit reference agency ‘footprints’. A footprint is created each time a credit search is made on a person or business recorded by the credit reference agencies. Over the last few years car finance comparison sites have cropped up on the internet with some very shady providers freely advertising on them. A common routine is to advertise a non existent car at a low rate. A customer agrees that he wants the car and the broker takes a finance proposal from the customer and proposes him for finance with one or several car finance providers. If the customer receives an acceptance from one or more funders the broker can now break the news that he can no longer provide him with the car advertised but looking at the acceptances he will look at the similar deals on offer from the lenders from whom he has received an acceptance, in the hope that the customer will accept one of the cars offered. If he chooses not to and applies elsewhere for finance, for example through a main dealer, he may now be declined as the funder suspects fraud due to the number of credit searches appearing in the footprint. The suggestion is that a quotation search is made in future, as happens in the mortgage industry, which leaves no footprint until the application completes but this must defeat the object of having a footprint in the first place and leaves the door open for the ‘shady brokers’ to continue their dodgy practices. The Select Committee is due to issue its report by the end of January. By Graham Hill
