AMI's May Mortgage Intermediary Census on credit footprints revealed a significant number of intermediaries are unaware which type of footprint (‘soft’ or ‘hard’) will be left by a lender on a client’s credit file when they obtain an agreement-in-principle (AIP)/decision-in-principle (DIP) from a lender’s website.
43 per cent of respondents said lenders’ websites never make it clear which footprint will be left on a client’s credit file while 32 per cent said this information is only made clear ‘some of the time’. This is despite the fact that 85 per cent of respondents revealed the method they use most to obtain an AIP/DIP is a lender’s website. 13 per cent said information on footprints is made clear ‘most of the time’, while 5 per cent said ‘always’.
AMI also asked how often respondents obtained an AIP/DIP for their clients before submitting an application form to the lender. 69 per cent said they either obtained an AIP/DIP ‘in all cases’ or ‘in most cases’. 30 per cent said ‘in some cases’ and 2 per cent said ‘never’.
Rob Griffiths, associate director of AMI, commented: “The issue of credit footprints left by lenders’ credit searches continues to frustrate mortgage intermediaries. Many are in the dark over whether a ‘soft’ or ‘hard’ footprint will be left following a request for an AIP/DIP. With the improvements in lenders’ technology and the move to affordability-based lending, brokers must be provided with clear information on what footprint will be left and at what stage of the process. They can then pass on this information to their clients and outline its potential impact.
“If intermediaries request multiple DIPs, and lenders are leaving ‘hard’ footprints with each credit search, this could have a damaging effect on the client’s ability to obtain future credit, and have a subsequent impact on their ability to shop around. Lenders should therefore update their systems to leave only a ‘soft’ footprint on the client’s credit file when a broker obtains a DIP; a ‘hard’ footprint can then be left at the full application stage.”
AMI has published a factsheet for members on ‘Credit Searches & Footprints’. It is designed to inform members about the different types of credit search used by lenders in the mortgage process and also looks at how these might affect a customer’s ability to obtain credit in the future.
