The system will allow intermediaries to credit score a client’s file instantly, prior to a decision in principle, without causing the same detrimental effects of a hard footprint to a client’s credit record.
When a decision in principle is made, most lenders 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 can 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.
The broker-only lender decided to change its process after brokers said they were worried about submitting applications for near prime borrowers in case they didn’t receive an offer and a hard credit footprint damaged their credit profile further.
Alan Cleary, managing director of Precise Mortgages, said: “We’re keen to innovate and listen to broker feedback which is why we’ve done this.
“It’s especially important for near prime borrowers to feel confident we won’t affect their credit rating when they apply for a mortgage from us.
“And brokers can now send us cases they might have been unsure about in the past, safe in the knowledge that when we do the DIP it won’t affect their client’s financial profile.”
Precise Mortgages uses scorecards which Cleary said means they can do the DIP on an application and have a clear yes or no in under 10 minutes.
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