Loan and credit card customers being penalised unfairly
It has been reported that many customers in the UK that are looking for loans and credit cards may be getting unfairly penalized as a result of the searches that are carried out when they make an application for a credit card or a loan.
The Treasury Select Committee has recently heard how the searches that are carried out on applicants looking for credit can adversely affect their credit files, and this often means that they do not get the advertised APR on the loan or credit card but a higher rate based on the risk that they pose to the lender.
Consumer groups have argued that the use of this risk based pricing, which is becoming more commonly used, it resulting in it becoming harder and harder for many customers to get a good deal on their borrowing.
It is also making it difficult for consumers to compare products, because if they apply for a loan or credit card and then turn it down because there are better deals out there this leaves a black mark on their credit report, adversely affecting their credit score.
The consumer groups have also said that a softer system needs to be in place where black marks are not left on credit files in this way, which means that consumers will be able to search around for the best deals without fear of having their credit score and file adversely affected.
However, lenders want the existing system to stay in place, as they say that they need to alert one another in the event that cash strapped consumers are applying for multiple loans or credit cards.
A recent study has revealed that many consumers are not even aware that making multiple applications or turning down credit can adversely affect their credit score.
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