Shopping around is good advice for most things. For finance, it can quietly cost you. Here’s what each application does to your credit file, and how to compare without the damage.
Every application costs points
Applying anywhere, or even using a lender’s “check your borrowing power” tool, puts a hard enquiry on your file. One enquiry can cost you 30, 50, sometimes more points.
Some lenders will only accept one enquiry in the last six months. Turn up with two, even from two big banks, and they won’t deal with you. To them it reads as desperation: someone else must have said no. More on what drags a score down in our guide to improving your credit score.
The “three approvals” trap
Some volume-driven brokers send your application to two or three lenders at once and hope one sticks. Then the call: “Great news, three approvals, take your pick!”
That’s three hard enquiries on your file. At 30 points each, that’s 90, potentially 150 points gone for one loan. When you’re back in three or six months for the next truck, car or machine, that damage is still there.
How we do it: one application
- A soft check first. We read your file and tell you where you stand, without it landing as an enquiry or touching your score.
- Workshopped before it’s sent. We know the policies of our 40+ lenders and have a contact at each. If there’s any doubt, we run the rough shape of your deal past them informally first.
- The 95% rule. If we’re not at least 95% sure a lender will approve, we don’t submit. If there’s a risk we can’t work around, we tell you and the call is yours.
Often the better move is to wait: a few weeks for an older enquiry to age, or a month or two more trading history so more lenders open up.
Tell us everything
Some customers hold back a past default, a bankruptcy or a rough patch in trading. Lenders will find it. When they do, it comes back as a decline that could have been avoided. We can only work around a problem we know about. Nothing you tell us hurts your application; what you leave out does.
Talk to us before you apply
Weighing up a truck, vehicle or equipment purchase? Call us before you touch an application form or a “check your borrowing power” button. It costs nothing and won’t touch your file.
Common questions
What is a soft credit check?
A soft check lets someone read your credit file without recording an enquiry lenders can see, so it doesn’t affect your score. A hard enquiry is recorded when you formally apply.
How long do credit enquiries stay on your file?
In Australia, generally five years. Lenders pay most attention to recent ones, especially those from the last six to twelve months.
Does using a broker affect my credit score?
Not by itself. A good broker checks your file without leaving an enquiry, and only one hard enquiry is recorded when the chosen lender assesses your application.
Does a declined application hurt your score?
The decline itself isn’t listed, but the enquiry is. A recent enquiry with no matching new account can lead the next lender to assume you were declined.
Have a question about your deal?