Credit enquiries

What is a credit enquiry?

A credit enquiry (also known as “credit inquiries”) is any attempt to seek information concerning the availability of funds without disclosing your identity, specifying the need of the proposed amount of money to be borrowed, or the specifics concerning your credit worthiness.

Any credit enquiries that you have made are saved against your credit file which the major banks and lenders are able to see.

How do you get credit enquiries?

Credit enquiries are saved against your credit file when you seek information through an organisation without disclosure of your identity as a borrower.

The two most common credit enquiries that appear on a borrower’s credit file include the following:

  • Home loan- If you have applied through a bank for a home loan however have been declined or for whatever reason you did not proceed with the loan, then this will be listed on your file as a credit enquiry.
  • Car loan- You may have shopped around several places to get a loan for a car. However if you have made too many enquiries for a car loan then your credit score will be reduced which could affect your needs when applying for a home loan.

The 6 month rule

When it comes to credit enquiries, the prime lenders prefer if you have made only 1 or 2 enquiries in the last 6 months, any more than this then it is likely for the banks to decline your home loan.

However there are some lenders who are stricter and will ask for explanations of all the enquiries that you have made in the last 12 months. In this case it would depend on the reasons that you provide to the banks to determine whether your loan application will be accepted for finance approval or not.

Please enquire online to find out which lenders tend to be less strict when taking your credit enquiries into account.

How long do enquiries stay on your credit file?

Just like all adverse listings, the credit enquiries that you make become a part of your credit history and will remain on your file for 5 years before it is removed. However you should repair your bad credit in order to improve your credit rating when applying for a mortgage.

What information do enquiries contain?

The following details are stored on your file for every credit enquiry you have made and can be accessed by financial institutions such as the banks and mortgage broking companies.

  • The name of the lender / company / institution
  • The loan reference number / case number
  • The principal, co-borrower or guarantor (the type of applicant you were)
  • The loan amount
  • The type of credit (e.g. real estate mortgage, car loan etc.)

It is important to keep in mind that the banks WILL FIND OUT all the credit enquiries that you have made and will be less lenient if they can see more than two enquiries in the last 6 months. Please enquire online to find out more!

How can I get a home loan if I have too many enquiries?

If you have made 1 or 2 enquiries within the last 6 months then chances are your loan will be declined by the major banks as they are stricter with their guidelines when it comes to lending. This is because banks perceive people as “credit junkies” if they have made too many enquiries in the time span of 6 months.

Luckily enough there are non-conforming specialist lenders that can get your application approved despite having made too many enquiries. However you will need to provide an explanation to the banks regarding the reason behind each enquiry and they will assess your loan accordingly.