A significant number of intermediaries are unaware of which type of footprint will be left by a lender on a clients credit file when they obtain an Agreement in Principle or Decision in Principle from a lenders website.
In the Association of Mortgage Intermediaries May mortgage Intermediary Census on credit footprints 43% of respondents complain lenders websites never make it clear whether a hard or soft footprint will be left on a clients credit file, while 32% said this information is only made clear some of the time.
This is despite the fact that 85% of respondents revealed the method they use most to obtain an AIP/DIP is a lenders website.
13% said information on footprints is made clear most of the time, while 5% said always.
AMI also asked how often respondents obtained an AIP/DIP for their clients before submitting an application form to the lender. 69% said they either obtained an AIP/DIP in all cases or in most cases. 30% said in some cases and 2% said never.
Rob Griffiths, associate director of AMI, says: 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 clients 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 clients 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 called Credit Searches & Footprints 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 customers ability to obtain credit in the future.