Why you should avoid a 'busy recent credit file'

Why you should avoid a 'busy recent credit file'

When it comes to your credit history, you want to keep it as healthy as possible, but even if you have a good credit history, making too many finance applications in a short space of time can cause you a lot of problems when it comes to obtaining a car loan.

What is a busy recent credit history and how you get it

Understanding your credit history is an important step in taking control of your finances and making good decisions when it comes to taking out a car loan. What your credit history tells prospective lenders is whether you have repaid any loans you’ve had in the past, if you have made payments on time and if you have any adverse, defaults or bankruptcies in your credit history.

When you are applying for any type of finance, whether it is car loans, a credit card or a mortgage, an enquiry will be run on your Equifax Credit Report. Every check that is run leaves an enquiry on your credit history that other lenders can see. A busy recent credit history is where lots of credit agencies have looked at your file in a short space of time, generally because you have submitted multiple applications to a variety of different lenders. Equifax gives you a free copy of your credit report once per year, so you can see what lenders and other credit providers can see when you make an application.

The negative impact of multiple applications

Even if you have a good credit history, submitting multiple credit applications is seen as “over shopping” by the financial sector. What it means is that your perceived ‘default’ risk is increased, even if you have a near spotless credit history.

The fact-of-the-matter is that if you are submitting multiple credit applications with different lenders, even if you don’t accept the offer that a lender comes back to you with, you could be seen as less creditworthy than other borrowers as this type of “over shopping” behaviour is common in people who are more likely to default on their loans.

Declines and higher interest rates

When lenders see a busy recent credit history they will often simply decline an application outright. If they don’t, then there is the other side of the busy recent credit history coin to deal with – the high interest rate.

When you submit multiple applications, the rate that lenders will offer you automatically gets set at a higher rate than you often deserve to be paying. When you submit multiple applications, you may think that it’s a good way to shop around to get the best deal, but ultimately you’ll end up with a lot of rejected applications, a busy recent credit file and a high interest rate on the lenders that do offer you credit.

Once you have a busy recent credit history there is only one thing that you can do – wait. You can’t take back any of the applications, or remove the enquiries that credit providers have run on your credit file. Time is the only thing that will clear a busy recent credit history, and when you are looking to get a car loan, time isn’t always something you have a lot of.

How do I get the best deal without creating a busy recent credit file?

The best way to shop around for a good deal on your car loan is to go to a broker, like Approved Car Loans. Brokers have access to a long list of different lenders and search through all of them to find the best deal for you, before submitting your application, thereby minimising the number of enquiries that are put on your credit file. It saves you time, money and stops you from getting a busy recent credit file. As a preferred broker service, we are able to look at your Equifax Credit Report without putting an enquiry on there, so that we know exactly what a lender will see when they check your Equifax Credit Report and so we can identify exactly which lender is going to be able to offer you the best rate finance option for your circumstances.

There is just one form to fill in, and your Approved Car Loans Finance Consultant will compare hundreds of products from over 35 lenders to find the best deal for you. This means that you don’t need to do the legwork, sit back, relax and let us save you time & money by doing it for you. Using a broker also means that you can see all of the options from different lenders in one place and you can easily compare them to see which finance package best suits your individual needs.

Don’t do anything before you’re ready

Though using an Approved Car Loans Finance Consultant does mean that your credit file will not be littered with lots of companies searching it for the same purpose, if you start looking for quotes for a car loan before you are ready to move forward, you will end up with enquiries left on your file from the broker. If you do this several times in a short period, or decide to use multiple brokers then you will still end up with a busy recent credit history – facing the same problems you would if you had chosen to apply to multiple lenders for finance at the same time.

Approved Car Loans

Approved Car Loans are here to make car finance easy by comparing products from over 35 leading Australian financiers to find the most suitable finance for you and your individual needs and we don’t leave behind a busy mess of enquiries on your credit file. Speak to your Approved Car Loans Finance Consultant today on 1300 4 CAR LOANS for more information or to get the best possible rate for your car loan.

Speak to your Approved Car Loans Finance Consultant today on 1300 4 CAR LOANS for more information or simply apply online.

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Tags: Credit File, Equifax Credit Report, Finance Applications

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