When you apply for a mortgage most lenders will at some point require to credit score you. Credit scoring has now become the industry norm, with the majority of lenders doing it.
Most people will have heard of credit scoring, but most people will not know much about it. So what is credit scoring and how does it impact on your ability to get a mortgage?
When a lender credit scores your application, they use the three main credit agencies in the UK, the two biggest being Experian and Equifax. I am sure most of you have heard of these two credit agencies, as they spend a lot of time selling there credit checking services via various media outlets.
These agencies hold information about your past credit history(up to 6 years) and how it has been conducted. They also hold the last 6 years address history for you and whether you are on the electoral roll at your current or previous address. All of this information is available to a lender when they score your mortgage application.
Now as I mentioned above, the two main credit search agencies are very active in selling monthly credit checking services. However did you know that you can check your credit file with either Experian or Equifax for the princely sum of £2? There is no need to sign up for monthly subscription, you can simply request a copy of your “Statutory Credit Report” which entitles you to a hard copy of your credit file. The information contained in your statutory credit report is the same as the monthly subscription, you can then check your credit file and make sure there are no errors in it.
One thing many people worry about, is how to improve their credit score. I have covered this off previously here. However to recap, there are things you can do, that will improve your overall credit rating.
Firstly make sure you are registered on the voters roll, lenders like to see you registered at the address you say you are staying at. If you have not registered yet, you can do it on line here
The next thing to do is check your credit file, as discussed above get a copy of your statutory credit report from Experian or Equifax.
Finally build your credit history, by making sure when you take credit out, conduct it well and make payments on due date.This will give a lender a good idea of you will conduct a mortgage. If they see you regularly miss credit payments, they are likely to be more inclined to decline you mortgage application.
Credit scoring by lenders is part of the mortgage application process in the majority of cases. Hopefully you will now have a better understanding of how the scoring of mortgage applications actually work.
If you need help or advice about anything discussed in the post the please get in touch and our highly trained Mortgage Advisers will be ready to help you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.