Banks and lenders use credit scores to help determine whether you qualify for the mortgage you have applied for.
The credit score is based on your previous credit history and shows to a bank or lender the type of borrower you are and how you should be able to manage repayments in the future.
Lenders own credit scores differ from credit reference agencies, they include other personal information and a history of credit transactions however credit reference agencies scores and reports are a great place to start to understand your own credit picture.
This is made up of your past financial history from your credit accounts. These accounts can be: overdrafts, credit cards, loan agreements, mortgages and utility company debts.
They show if you have made repayments on time and in full. Any missed or late payments, or defaults will stay on the report for at least six years.
The Credit Score
The general rule is: the higher the numerical score the better. Lenders are more likely to view that person as lower risk.
Just because you have a lower score than you expected or have already been rejected by a mortgage lender does not mean you cannot get a mortgage.
Mortgage brokers have access to lenders and banks that specialise in lending to those that have had credit issues. Those lenders will also consider other factors when assessing a mortgage application.
What affects the score
The main factors are:
How you manage your debts – have you missed payments or gone into default?
How many recent credit searches have been made against your name.
How visible you are to the search – are you on electoral role?
Managing your credit score
If your score is low or you would like to maintain a good score, then below are a few tips:
Review regularly and make sure the information is correct
Avoid missing any payments
Register on the electoral role at your current address.
Speak to one of our team
Credit scores and mortgages. If you are unsure about your credit history and are looking to purchase or remortgage your home, then speak to us to discuss which mortgage will be right for your circumstances.
Your property may be repossessed if you do not keep up repayments on your mortgage.