The best credit score for a mortgage

Posted by Kelly Luff in Mortgages on 16 February 2017 - Kelly is a Marketing Executive at checkmyfile

A lot of customers come to checkmyfile because they are planning on applying for a mortgage – your credit report is, after all, the best place to start is it’s helpful on more than one occasion . But often the question is often asked: “what credit score will get me the mortgage I need for my dream home?”

Unfortunately it’s not as simple as saying “a score of 862 is going to lead to a successful mortgage application”. Even lenders will have trouble giving you that elusive number. But there are lots of elements that you can control and improve upon, to have the best chances possible of getting the lending you need.

What dictates the score I need?

The credit score you need depends on the lender you are applying with, as the product they are offering will most likely have its own lending criteria attached to it. If you are looking for a fantastic, low-rate mortgage, you will most likely need either a lot of equity to put into your home, or a great credit history (but ideally both).

Your score reflects positive information on your credit file; not missing payments, having been in your job for a long period and even being registered to vote tell lenders that you’re the kind of secure, stable customer they dream of. While a high score reflects this, it isn’t the be all and end all of whether you’ll be granted a mortgage. Making sure you’re doing the right things with the following bits of information on your credit file will go a long way to help your application:

Electoral roll status

Make sure you are on the electoral roll electoral roll at your current address. Electoral roll registry shows lenders that you have stability in your living arrangements, and it also helps when your accounts are all held at your current address. Make it as easy as possible for lenders to tally everything up and leave them with as few questions to ask as possible.

Credit account information

Are your credit accounts in good order? Late payment markers, arrears, arrangements to pay, debt management plans and defaults will all raise questions with most lenders. For some it will depend on how old they are, but for others it will impact whether they automatically decline you, so it’s worth being aware of what is held.

If there is a marker you don’t agree with or don’t recognise, get in touch with the lender as soon as possible. It can take weeks to get incorrect information updated, so don’t leave it until the last minute to chase.

Court records

Some mainstream lenders might steer well clear of those with court records , but lenders who lend to those with court records will adjust their rates to offer mortgages in many circumstances.

This can also depend on the age and type of court record - if you do have an old CCJ it may still be worth checking with more mainstream lenders, as they can occasionally disregard records more than 3-4 years old. A mortgage advisor can confirm which lenders might do this for their customers.

Credit Searches

You might be excited about your new home and start buying sofas or fridges early, or you might think that your gorgeous new home deserves a brand new car to sit in the driveway. Unfortunately, lenders can look at lots of credit-based spending in the lead up to an application in a negative way, particularly if they don’t have any history showing that you are able to repay this debt.

Credit searches on your report show up possible debt that hasn’t yet made it onto your account history – for all a mortgage lender knows, you might have taken out all five of the credit cards you’ve applied for and are currently racking up debt that could impact on your mortgage repayments.

So play it safe until you’ve got that mortgage – you don’t want your new car or new sofa purchase to impact on the comfort of your new home.

Also, applying for lots of mortgages in a short space of time will also show up on your credit searches, and could imply to a lender that you’ve been turned down. This may then give them cause to look further into why you may have been declined. This is another case where an experienced mortgage advisor can help ensure that you aren’t applying for products you’ll never be accepted for.

Financial Associations

You’ve checked your credit report and all the points listed above are looking in great shape. That financial association from a joint loan with your mate from 2011 won’t make a difference, will it?

If you’ve shared any debt with someone else, whether it’s a bank account, a mortgage, or in some cases guarantor loan, an association can be made on your credit report. Even if you haven’t seen this person in years, their name on your report will allow lenders to check their credit report as part of your application.

And if Bez from uni, but more recently your loan guarantor has gone bankrupt in the years since you last saw one another, or that difficult ex with a shared bank account has a less than rosy credit score, this can impact your chances of getting credit as lenders will look upon associations as if they are current. You can dispute these with the credit reference agencies to get them removed if there are no longer any open accounts with this person or we can dispute these on your behalf.

So, if you are looking at houses, look at your credit report first. Getting this part of the admin out of the way will allow you to look at potential homes without worrying that it might be a problem further down the line. And it’ll prevent the heartache that can occur if you do get declined because of something that could have been easily fixed earlier in the process.

Make sure you’re giving yourself the best chance

If you know that you are going to struggle with getting a mortgage, as you have defaults or court records, sub-prime lenders you might be looking at will be taking those black marks into account and reflect them in the interest you’d have to pay over the term of the mortgage.

Speaking to a whole-of-market mortgage advisor is in many cases the best bet for your first mortgage. They will be able to look at all of your personal details and advise on suitable products, to prevent you being unnecessarily declined.

So…your salary makes your mortgage look easily affordable, you’ve cancelled all your unnecessary Direct Debits and you’ve got your deposit saved. This is when checking your credit report is the most important element left to do.Any problems can take weeks to have investigated and updated , so it isn’t worth leaving it until you’ve found your dream home and the lender then picks up a problem.

Taking the time to check your credit history with us gives you the opportunity to see what the lenders will see. For many of us a mortgage will be by far the biggest loan we’ll ever take out, and lenders need to know we’ll pay it back and understanding how lenders will assess you is a great way to help you find a mortgage.

Make sure you’re seeing the most up-to-date info being reported to lenders will give you the best idea of what your credit score is and more importantly, how they will view the rest of your file. If you haven’t checked your credit report yet, you can try us free for 30 days, then £14.99 a month and cancel at any time.

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