Many consumers are developing a bad credit rating because they make multiple applications for credit, claims a new report.

Price comparison website moneysupermarket.com believes that around two million UK consumers could be damaging their current credit profile and paying higher interest rates because they make numerous applications for a credit card or loan.

About ten million people have had a credit card application declined in the past but many fail to realise that continuing to find a provider that will accept them can have a negative impact on their credit report.

Every time an application for credit is made it is recorded on a person's credit file and it can influence the decision of the next provider approached by the consumer, meaning they may be rejected again or offered a higher rate of interest.

However, a reform of the credit card or loan application process could help to ensure that borrowers find a product that will meet their needs without damaging their credit history.

Robert Kenley, head of credit cards at moneysupermarket.com explained: "Asking a series of questions before even applying for the card means the consumer is steered only towards cards for which they are most likely to be accepted on the first attempt."

For consumers with a history of failed credit card applications there are a number of products such as Bad Credit Loans that could help offer an alterative borrowing solution.

Posted by: Peter Kudela
Date: 18th October 2006