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Shopping around for loans 'should not affect people's credit rating'
The Treasury Committee has released a new report calling on the Office for Fair Trading and the Information Commissioner's Office to investigate the impact shopping around for loans can have on a person's credit score.
According to the Credit Searches report, filling out lots of application forms for loans or credit cards can build up a number of credit application searches on people's credit reference files, making to harder for them to borrow.
The group of MPs conducted research into the way loan providers assess suitability and suggested that they do not need to use search data when making their decision.
They also highlighted that there is little evidence to suggest that making multiple application searches is an indicator the customer should be blacklisted.
John McFall, chairman of the committee said: "Christmas is precisely the time when consumers are likely to be feeling the pinch. Everyone naturally wants to be able to give their loved ones something nice.
While it is right to protect consumers from potentially reckless lending; equally, they shouldn't be penalised for shopping around for loans."
The MPs have also suggested that the OFT should make consumer access to credit reports free of charge.