The latest GoCompare advert has raised questions among financial advisors regarding the dangers of using comparison websites when searching for a new credit card, loan or other financial products.
In the advert a taxi driver is suggesting there should be a website to find out the best mortgage rates and the cheapest financial products around. GoCompare’s answer is of course to use their website, as is pointed out in the advert by their infamous opera singer.
What the advert doesn’t tell viewers, and what most comparison websites fail to explain, is that using their service could be harmful, especially to someone’s credit rating.
What Comparison Websites Don’t Offer
Comparison websites can show a range of financial products, including their benefits, fees & charges and even how much you could save. What is harder to predict is whether or not the cheapest deal is in fact the best!
Websites such as GoCompare will not perform a credit search or ask whether someone has defaults on their credit file – which is a vital question when applying for mortgage products!
Often people will be told how much they could save, but it doesn’t guarantee that a person will be accepted for a mortgage. On paper, a mortgage may be recommended on a comparison website, but in practice there could be a number of reasons the mortgage isn’t granted. This will become clearer once someone has had a credit search completed and been rejected. If someone is rejected and their credit file is damaged they may not be aware of the implications, often they will opt to try the next product on the list and further harm their credit score. Being rejected for financial products and consistently applying for credit will leave a negative impact on a person’s credit score.
Alternative to Comparison Websites
A financial advisor will check their client’s credit score by applying for their credit file. An advisor will use this information to match the most suitable financial products to the consumer, so the whole experience is tailored to the individual and less likely to be rejected by a lender. In turn, this should mean the client doesn’t waste time applying for loans which they aren’t able to obtain and which can negatively impact their credit score.
Eddie Chisholm, Director of The ER Network, said
“Comparison websites focus on a price based service – but cheapest isn’t always cheerful. We all want to save money on our mortgage, but if we’re rejected in our application it can harm our ability to be accepted in the future. In many instances, people could be applying for a mortgage which they have no potential to be accepted for.”