Every single time you make an application for credit, whether it’s a loan, credit card, store card, overdraft, or mortgage, your prospective lender will search your credit record.

In fact, even when you apply for car or home insurance a search will usually be carried out on your file. These searches are carried out to deem what sort of borrower you are by looking at how you have handled credit in the past, among other things.

Lenders search your record to decide whether or not you fit their criteria of a desirable borrower, and accordingly whether or not they will want to lend to you. Each of these searches leaves a mark which can be seen by any other lender who then searches your file.

What’s the problem?

Although all lenders’ idea of an ideal borrower is different, many lenders will view multiple credit applications within a short period of time as a bad thing.

This is because by applying for several lines of credit within a short period of time you create the impression that you're in desperate need of funds, and, from a lender's perspective, less likely to be able to pay any further borrowings back on time.

As such a prospective lender is more likely to see you as a risk and may decide not to lend to you on the basis. This is particularly the case if previous applications for credit have been declined.

For this reason you should always check the application criteria for a financial product before you apply.  This way you have a good idea of whether or not the lender will accept you on terms such as salary, credit rating, and age before you allow them to search your file.

It goes without saying that you should never make lots of credit applications willy-nilly, for instance submitting multiple quotes for a loan simultanously just to see who will accept you, as this can only ever be damaging.

Read our article on what to do if your credit application is declined before applying for credit elsewhere.

Of course, a lender could decide to lend to you even if you have multiple searches because, perversely, they are more likely to make money from you as you’re more likely to default on repayments – although these sorts of shady practises are beginning to be rubbed out by credit authorities.

So how many is too many?

There’s no hard and fast rule that determines the number of credit applications that will push you from seeming like a responsible borrower to an erratic, unreliable one, because every lender will have different criteria to satisfy.

Ideally you should try and leave at least a few months between applications. However, this isn't always possible so as a rule of thumb it’s good practise never to apply for more than one line of credit at a time. So, if you are intending on applying for a mortgage, try to time it so that you aren’t also applying for a credit card at the same time.  

Interestingly there is such a thing as a ‘healthy’ number of credit searches on your credit record – a few applications noted on your record, spaced out, is better than none.  If a lender looks at your record and sees that you have handled credit in the past and been able to pay it back on time, they will be more likely to lend to you because they have some concrete information to go by.

However if you have never applied for credit before, a lender will have no information to go on that you can be a responsible borrower except your word. As such they’ll be less likely to lend to you than if you had a ‘healthy’ amount of credit history on your record.

What else should I consider?

As well as spacing out applications for credit and only applying for one line of credit at once, it’s also a good idea to only apply for credit when you are in a financially stable position to do so. For example, you’ll have more luck applying for credit if you are in stable employment and have a fixed address listed on the electoral roll.

This not only makes you appear a more sturdy and upright citizen to the lender, it’s also simply good sense to only apply for credit when you’re in a stable financial position to be able to comfortably pay it back.

It may be comforting to know that any ‘bad’ information on your credit report such as multiple searches in a short space of time, late repayments or CCJs will only stay on your credit record for 6 years before being wiped. 

A lender is more likely to be more interested in how you have handled credit in the last 1 or 2 years rather than what you did 5 or 6 years ago – so if you have a history of multiple searches in the past year, this doesn’t mean you have to wait 6 years before going about applying for credit again.

What’s more, any ‘good’ information on your credit record such as repaying credit on time will stay on your file permanently. 

This information about your credit behaviour is often seen as a more reliable indicator of how likely you are to make repayments.  For this reason it's usually given more value than how many credit applications you have on file which is why being careful with your money is equally as important as how many times you apply for credit.