Mortgage Lenders Credit Scoring & Credit Report

Sep 20, 2019 | Mortgage

Mortgage Lenders

Credit Scoring and your Credit Report

Every lender has their own way of Credit Scoring applicants. Some lenders are stricter than others and just because you don’t have any adverse/bad credit on your Credit Report. It doesn’t necessarily mean you will be accepted by every lender. Don’t take it to heart, some lenders are just much stricter than others, when it comes to who they will accept.

Always obtain a copy of your Credit Report before applying for a Mortgage. Credit Reports show a detailed 6-year history about you and your finances and Mortgage Lenders like complete accuracy when it comes to this. Non-disclosure, whether intentional or by accident is a Mortgage Lenders pet peeve so obtaining a Credit Report proves invaluable during the Application process. And it really helps your Mortgage Advisor show a true reflection to the lender about you and your finances.

There are three Credit Bureaus that Mortgage Lenders will check:

  • Experian
  • Equifax
  • Call Credit
“Our primary objective in every mortgage transaction should be to borrow in a way that reduces debt, improves financial stability, and helps us get debt free in as short a time as possible!”

Credit Bureaus

Most lenders will check only one of these. Some will check two or all three. And strangely enough, your Credit Score and overall Report will look different to each one of these.

So, if your credit report or score doesn’t look the best, it might be worth obtaining your report with all three of these and showing them to a Mortgage Advisor before you consider applying. As an Advisor will know which lender uses which agency and therefore which lender you are likely to have the best success with.

Only one Credit Reporter displays the data that each of the above Credit Bureaus holds on you.

So, we recommend obtaining a copy of your Report with them:

www.checkmyfile.com – sign up and get a free 30-day trial – so obtain a copy of your report and then cancel it within this time.

hard or soft footprint check

There are two ways lenders will complete a Credit Check on you at Decision in Principle stage. Either by leaving a soft or hard footprint on your credit file. Most lenders will leave a hard footprint on your credit file, meaning it will register on your credit file for other prospective lenders to see and will negatively affect your credit score if you apply with multiple lenders.

Soft footprint searches will not negatively impact your score and will leave no trace on your credit file.

Mortgage Advisors know which Lenders will complete a hard or soft footprint check at Decision in Principle stage. And will be able to advise on which and therefore credit check will be best for you depending on your individual circumstances.

specialist Mortgage lenders

Each lender has a different way of Credit Scoring. Mainstream/High street lenders will complete an automated score on you at Decision in Principe stage and if you do not meet the marker they set, it will be an automated decline.

However, there are specialist lenders that will complete a Credit Check on you and instead of setting a score you must meet. They just look to see if you fit within there particular criteria. For example, no adverse within the last 3 years will equate to a pass.

hard or soft footprint check

To give yourself the best chance of being accepted, there are a couple of things you can do to help:

  • Try not to miss any payments on anything – missed payments on anything from a Mobile phone bill to Utility bill as well as Credit Cards and Loans could show up on your report.
  • Obtain a copy of your Credit Report and check it. It might sound simple, but there might be something on there you were not aware of such as being linked to an ex partner. Also, it will be invaluable to any Mortgage Advisors to have a copy of this to hand.
  • Try not to change addresses regularly, if you can help it. Lenders may view this as you trying to escape something such as a debt. 
  • Register to vote (be on the Electoral roll) – this is key and is often something people aren’t aware of.
  • Close old accounts that you’re not using – shows you have a higher credit facility than you’re using and also opens you up to potential fraud.
  • Obtain a copy of your Credit Report and check it. It might sound simple, but there might be something simple on there.
  • Don’t take out Short term/Payday loans for at least 6, ideally 12 months before your looking to apply for a Mortgage.
  • Try not to take out any credit, if it can be helped, immediately prior to applying for a Mortgage.

Taking out new recent credit commitments

It’s a well-reported myth to people with no credit, that taking out a Credit card and making a couple of payments on it 3-4 months before you want a mortgage, will improve your score and show the lender your creditworthiness.

This is simply not the case. If you have recently taken out a credit card or loan, for example, it often surprises people, that the score is subsequently dented for many months after applying. This is because you have applied for credit and left a footprint of your credit file. Credit reporters will now want to see a good record of repayments before your credit score begins to improve. This shows them your creditworthiness and proves you haven’t borrowed beyond your means.

get in touch for more information

Whether you’re a first time buyer or simply looking to Remortgage. Get in touch with us today, so we can put you in touch with a Mortgage Advisor which Specialises in your case.

We will only put you in touch with a Mortgage & Protection Advisor which Specialises in your individual circumstances. Your information will not be used for any other purpose.

For more information or you would just like to find out more about us, please do get in touch.