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Mortgages Made Simple
For most of us, buying a home means applying for a mortgage and success or failure could depend on your
financial history.
Your Credit Report
Your credit report is your personal financial history. It includes a wide range of information on your
credit behaviour, from your credit cards and loans to your repayment record, previous mortgages and
details of overdrafts.
The report also confirms whether or not your name is on the electoral roll at your current address and
how many times your credit report has been searched.
Credit reference agencies - Experian is the UK’s largest - hold this data on more than 40 million people
and 24 million households. So it’s likely that they have information about you.
View your Experian credit report online for FREE and see the same information that mortgage lenders see
Making a decision
When deciding whether or not to give you a mortgage, the mortgage lenders look first at the details on
your application form. If you don’t fit their criteria for being offered a loan, they are unlikely to
search your credit report. Typical deal-breakers include being too young, insufficient current earnings
or too short a self-employment history.
They may then look at any previous relationship that you may have had with them and how you conducted it.
The next step is to search your credit report. A lender may use this information to help create your
credit score, by comparing you to past customers with similar characteristics. The result is a numerical
assessment of how good a credit risk you appear to be. Normally, the higher your rating, the more likely
the company is to lend you the money you want.
Getting a copy of your report before you apply for a mortgage will allow you to check that the information
it contains is accurate and up-to-date.
For example, if you had a court judgment against you but have paid the debt, you should make sure the
record reflects this. Equally, if you paid off the debt within one month, the judgment can be removed
from your report. Or perhaps the fact that you registered to vote has been missed and your name has not
been confirmed on the electoral roll. In this case, you should let Experian know. They will investigate
and amend their records accordingly.
If you believe that some of the information on your credit report needs further explanation, Experian
will help you to add a brief statement or Notice of Correction to your report. This will be seen and
may be taken into account by any lender using the information to which it relates.
Use Experian to view your credit report online for FREE
If at first you don't succeed
Lenders turn down roughly one-third of all mortgage applicants. If you are one of the unlucky ones, you
should be given an explanation. If not, ask for some guidance.
For example, you may not be offering
enough deposit or appear to be carrying too much debt from other sources. It may be that your credit
report rang alarm bells, perhaps because you had missed some payments on a previous loan.
You can always appeal against the decision and ask the lender to look at your application again. This
may give you chance to provide further information. For example, your poor credit record may stem from
a one-off event that no longer applies, such as a serious illness or enforced redundancy.
Finally, there’s nothing to prevent you applying for a mortgage from another company. Different lenders
may take a different view. But be careful how many applications for credit you make in the short term.
If you allow a significant number of companies to search your credit report, this could damage your
credit rating as it could be interpreted to mean that you are desperate for money or possibly that
someone is trying to commit fraud. If you know that you have been refused credit because of your credit
report, it is always sensible to check it before making any further applications.
Click here to view your Experian credit report online for free and see the information mortgage lenders see
No nasty surprises
To help avoid any nasty surprises, you can keep tabs on your credit report by signing up for a free,
30-day trial of CreditExpert, an online credit monitoring service from Experian. It means that you can
check your credit report at any time - invaluable when you are applying for a mortgage, when you often
need to move fast. You will also be warned by a weekly email or text message when a significant change,
such as a new search, is registered.
Joining CreditExpert also allows you to order a copy of your National Credit Score at the special offer
price of £4.99. It only uses the information in your credit report but it will give you a good idea of
how lenders will rate you.
And if you need to improve your credit report, the CreditExpert site contains plenty of advice, hints
and tips that will help you to turn your dream home into reality.
Click here to view your FREE credit report from Experian |
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