Most of us will have used a comparison website at some point. We can now easily hop online and check the most competitive quote for a range of services from car, life, buildings or content insurance to a great broadband or energy deal.

The growth of comparison websites over the last few years shows they’re big business. However, how do you compare the comparison sites to know you’ve had access to the actual best deal without trawling each and every one? Also, are you just buying for the incentives, be it a cuddly mascot or bonus film package and not actually receiving the most competitive offer?

There is another side to using these sites. They can affect your credit score. Each time you use a comparison site, you top up the number of searches appearing on your credit file. These will initially be ‘soft searches’ showing you’ve made an enquiry and are used to verify who you are. Employers and prospective landlords use the same type of checks. Soft checks show up as an enquiry and are not full credit searches. However, it’s very easy to rack up quite a search footprint if you’re looking through a few sites. More worryingly, if you’re tempted to want to discover more details about a deal, such as how much monthly installments will be, you may suddenly find yourself having to read a privacy policy or terms and conditions to be able to access the exact information. Accept these and you will be going through a hard credit check which will show up on your file even if you eventually choose not to opt for that product or decide to pay for it in one lump sum.

Hard credit checks do a full search of your credit file and can harm your credit score if too many are carried out over a close period of time. They’re used whenever you apply for credit so if you want to pay monthly for your compared insurance product, that’s when a check would take place. Once this has happened, the information stays on your file for 12 months.

The downside to having too many checks within that 12-month period are that it can lower the chances of you securing the best deal. Each check impacts and lowers your credit score. Lower credit scores mean more risk to those granting the credit and so higher rates are applied.

It’s worth noting that the comparison sites themselves don’t credit check you, the individual insurance companies listed on the website do, whether it’s a soft or hard check. Each provider listed in your quote will have done a search of your credit file. These providers gain consent to carry out the checks via the privacy policy or terms and conditions you’ve entered into on the comparison site. Another point to note is that once you’ve signed up to a site, they may perform credit searches each year in order to send you new quotes.

On the other hand, if you head to a whole of market provider, you will be able to make an informed decision before going through a credit check should you want to take up a product and pay for it in monthly installments. At Covertree we offer a fully advised service without the need to run any credit searches. Talk to us about your needs and we will find the right product for you.