Borrowers who ask for quotes on personal loans appear to be unknowingly getting stung by credit score searches.
Banks do not always tell their customers that simply asking for a quote can damage their credit scores. A so-termed 'hard search' is conducted each time a quote is requested at some lenders - including Tesco bank and Derbyshire building society - even if no formal application is made. This is despite the availability of 'soft searches', which would leave no trace on a person's record.
RateSetter conducted a survey on the matter and found that just 28 per cent of loan applicants had been told of the potential impact on a credit score after asking for a personal loan quote.
A string of such quotes can put a person's future chances of being accepted for a personal loan into jeopardy.
Robert Watts at the British Bankers Association told The Sunday Times: "Lenders are obliged to ask the customer's permission to carry out a credit search and tell them whether the search will be recorded on their credit history."
With interest rates on loans varying widely, particularly for smaller amounts, it is important to shop around and get quotes, however.
Lenders such as Nationwide building society, Zopa and RateSetter, as well as Barclaycard, use the soft search facility when giving quotes. The Smart Search loans tool on moneysupermarket.com also uses the soft search. 
