Zopa has issued guidance explaining how its credit checks work.
Credit searches allow the platform to use borrowers’ personal information and see their credit history, as well as other public records that help the lender to make a decision.
Zopa uses three types of credit searches, soft searches, hard searches and associate searches.
The soft search gives borrowers a personalised quote before they apply for a loan to inform them of the rate they’ll get and how likely they will be accepted.
These searches won’t leave a mark on their credit file. Borrowers will be able to see that one took place, but other lenders won’t be able to see that they received a quote from Zopa.
When borrowers submit a credit application, Zopa performs a hard search which will appear on their credit file for everyone to see.
Too many hard searches in a short period of time may impact a consumer’s credit score and therefore their ability to be accepted for new lines of credit.
Zopa will only conduct one of these hard searches per application, and only after borrowers click to ‘submit’ their application.
Furthermore, when borrowers request a quote, Zopa will also search the file of any person that they are financially tied to, known as ‘financial associates’.
They can be linked through things like joint credit applications or joint accounts.
An associate search will be visible to the borrower’s associate if they look at their credit file, but other lenders won’t be able to see it and it won’t affect their ability to apply for credit.
If consumers find they are linked to someone who they don’t believe you should be financially tied to, they can file for a disassociation with the Credit Reference Agencies (CRAs) to have this amended.
“We take our position as a responsible lender extremely seriously, so it’s important that we get a full financial picture of our loan customers to help us decide whether a loan is affordable,” Zopa said in a blog on its website.
“This is why Zopa performs credit searches.”
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