The system will allow intermediaries to credit score a client’s file instantly prior to a decision in principle without causing the detrimental effects of a hard footprint to a client’s credit record.
When a decision in principle is made most lenders would typically carry out a credit check and leave a hard footprint on a borrower’s credit record which can be seen by other financial providers.
If the customer decides not to proceed with the mortgage, the hard footprint remains. Brokers say this could be detrimental to the client’s credit rating as many lenders view multiple hard footprints as the sign of a “credit hungry” customer, possibly indicating that they have been previously turned down for a home loan.
A soft footprint is used by lenders if they want to credit check a customer in order to produce a detailed price quotation for a mortgage.
Other lenders can also see these soft footprints, but as they only reflect a quotation rather than an actual mortgage application, they are viewed very differently to hard footprints.
Alan Cleary, managing director of Precise Mortgages, said: “While this sounds like a small change it is significant. Brokers can now get a decision on a near prime mortgage case in about 10 minutes without any detrimental effects on their customers’ records.
“We undoubtedly have the quickest near prime process in the market and I would go as far as saying it is now as easy to place a near prime deal as it is a prime deal.”
Gary Thorpe, principle at Newcastle Mortgages Services Financial, said: “This is a great move as anything that makes it easier to place near prime cases has to be applauded. It is good to see a lender listening to brokers and acting on the feedback, the market needs as much innovation as it can get.”
