Mortgage shopping and impact on credit score

A credit score is a very important input for the lending decisions considered by the lender when approving your mortgage application. A question that bothers most of the borrowers is the impact that shopping around for a mortgage with multiple lenders has on their credit score. Does shopping around for a mortgage with multiple lenders really impact the credit score?

What is a credit check enquiry?

There are multiple credit rating agencies in Australia. The most notable ones are Equifax (formerly known as Veda), Experian, Illian. Lenders typically do a check with one or many of these agencies before they make a lending decision. If the enquiry results in a good outcome, lending decisions are easier to make for the lender.

Unfortunately, every time a lender asks a credit agency for a credit check on a borrower, a record is left on the credit file of the borrower.

What happens to credit files when you shop around with multiple lenders for a mortgage?

Now that we know a record is left on your credit file every time a credit check is made, is it wise to shop around with multiple lenders for a mortgage?

The answer, unfortunately, is a NO. The credit risk teams when approving lending to a borrower consider a borrower with multiple credit checks records on their credit file as a high-risk borrower. They may conclude the previous credit check resulted in a negative lending decision at another lender resulting in a reduced credit score.

Many lenders prefer to see a maximum of one or two credit enquiries on your credit file. Any more than two is likely to result in a decline on your mortgage application.

How to shop around without impacting your credit score?

At FairBroker®, we understand the intricacies of impact on credit score when shopping around. We have designed FairBroker® to ensure you can shop around and get attractive offers from Mortgage Brokers and Lenders before they perform a credit check on you.

Creating a deal request on FairBroker® does not give Mortgage Broker or Lender consent to run a credit check on you. This means no credit enquiry entries on your credit file when you create a deal request on FairBroker® and get mortgage offers.

Shop around for mortgage safely on FairBroker®. There is no impact on your credit rating when you shop around on FairBroker®.

It is our mission to ensure transparency and the best outcome for the borrower and hard-working mortgage broker. Looking for a mortgage or looking to refinance your existing mortgage? Create a deal request on FairBroker® and get unbiased mortgage advice and assured commission share from mortgage brokers.

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