What is a Credit Report?
A credit report provides a breakdown of all your credit commitments in the last six years and confirms whether you have managed to maintain your payments within that period. The report will provide a credit score that essentially confirms how reliable you are when borrowing money.
There are several different companies that produce credit reports such as Experian, Equifax, Transunion, and Crediva. In some circumstances, the information on the credit reports may differ and the score provided may vary as they have their own individual scoring system. Ultimately they all produce similar information. Credit scores are kept in this way so that creditors can have a generic tool to assess whether they will lend to you.
Credit Reports and Mortgages
When you apply for a mortgage typically lenders will complete a credit check on you to see if your credit profile meets their specific criteria. Every lender has their own criteria when assessing mortgages and part of that will be who they use to perform the credit check. They could request information from Experian, Equifax, Transunion, or Crediva. They may assess one or a combination, as a result it is important that you check as many as possible as the information may vary between them.
We often request to see a copy of your report prior to applying for a mortgage just to be sure we have seen the whole picture. This allows us to get ahead and stop any unnecessary credit checks with lenders when the case may not fit with them. If there is something on there you were unaware of it allows you to take action as soon as possible, as opposed to being let down by the lender rejecting the case following a full mortgage application.
We recommend getting a copy of your credit report from Checkmyfile, they are the only company in the UK to provide credit reports that include data from Equifax, Experian, TransUnion, and Crediva all in one document.
This allows us to double check all the information matches up across all credit reference companies.
If there is anything unexpected on your credit file we will help provide as much guidance on what to do next.
Don’t panic, if there is any adverse it does not necessarily mean you won’t be able to get a mortgage.
We have access to high street and specialist lenders who may still be able to assist you.
Checkmyfile free credit report*
If you follow the link below you will benefit from a free 30-day trial, which can be cancelled at any time. So you can essentially sign up, download a copy of your report and then cancel the membership if you do not want to pay a fee. If you decide to stay on beyond the 30-day trial there would be a monthly fee of £14.99.
They offer more than just a credit score:
See your data from 4 Credit Reference Agencies, not just 1
Get an independent view with your checkmyfile Credit Score
Really easy to cancel - by Freephone or even online
We guarantee never to sell your personal data
Consistently rated ‘Excellent’ on Trustpilot
Please note we will receive £12 from checkmyfile if you sign up with them.
What credit score will I need to get a mortgage?
In short, there isn’t a specific/magic score that is required when applying for a mortgage, and that’s because criteria between lenders vary.
While different lenders may have varying criteria, a higher credit score generally indicates a lower risk for the lender and increases your chances of obtaining a mortgage. However, it is important to remember that other factors such as your income, expenditure, employment history, and debt-to-income ratio (but not limited to) are also taken into consideration. So it’s not just your score alone that is important, it is the whole picture.
Getting a mortgage with any credit score could be possible, however having a low credit score may limit the option available to you or may require a specialist lender. Again it depends on the overall case as a whole.
Please note that having the best possible credit score does not guarantee you will be able to obtain a mortgage.
Tips for improving your credit score…
1. Download a copy of your full Credit Report
A good starting point is to download a copy of your full report so you can see your credit history in the same way lenders will. We recommend downloading a copy from Checkmyfile. This will allow you to keep an eye on things to ensure there is nothing on there that is unexpected.
If you see something on your credit report that you do not recognise or suspect to be fraud get in touch with the reference agency to discuss further as soon as possible.
Please note we will receive £12 from checkmyfile if you sign up with them.
2. Check the information is correct
You will need to review the information to make sure it is all accurate and up to date. Check that all your credit accounts are listed correctly and carefully review them for any missed payments, defaults, and any other recorded factors. If you identify any discrepancies or errors, it is essential to contact the credit referencing agency to rectify them.
3. Get on the Electoral roll
This will prove where you currently live – you do not need to own the property to do this, you can do this even if you are living with family or in shared housing.
4. Ensure you make regular payments on time
Demonstrating responsible credit management by consistently paying your accounts on time and in full each month is an effective way to showcase to lenders that you are a reliable borrower, capable of handling credit responsibly. If you were to miss a payment it will leave a negative marker on your credit report for that month and may reduce your overall credit score. A simple way to avoid this is to ensure that all your bills are paid by direct debit, this way you don’t have to worry about forgetting to make the payment as it will be completed automatically for you.
5. Reduce your credit usage
Having a high credit utilisation (the percentage of your credit limit you use) for example maxing out credit cards and overdraft facilities could show you don't manage your money well and could be an issue with some mortgage providers.
6. Be cautious with credit applications
Every time you apply for credit such as a credit card, mobile phone contract, paying monthly for car insurance, loan, or Mortgage Agreement in Principle they will complete a hard or a soft search on your credit file. If they complete a hard search it will be recorded on your credit file.
Too many of these at once could impact your credit score. If you are thinking of completing a Mortgage in Principle, we always recommend speaking to a Mortgage Advisor in the first instance.
7. Close accounts that are collecting dust
If you have a number of unused old credit accounts such as credit and store cards it may help improve your credit rating by closing these. Having access to multiple credit accounts in the background could put some lenders off as they may worry that if you start to use the credit facilities it may put you in a difficult financial position.
8. Try not to use your credit card to withdraw cash from ATMs
This can be expensive in terms of fees and interest as a starting point however, some lenders could view this as a bad financial habit.
9. Check financial links to others
Opening a joint financial account such as a bank account or even a utility bill/ broadband may mean you have a financial link with that person in the background. This could have an impact on your credit in the future because when you apply for credit on your own/separately from that person lenders can look at the linked person’s record as well, which could lead to a decline if they have not maintained their credit.
10. Sit back, relax, and be patient
Improving your credit rating can take time, your score is typically updated monthly. Implement what you can and try and get your overall financial health in order to put yourself in the best possible position when it comes to applying for a mortgage. As always speak with an Advisor to see if they can offer any more advice/guidance.
Don’t panic…
If there is anything on your credit report you think could affect your mortgage chances get in touch with us and we would be happy to discuss it with you and let you know the potential implications. Don’t just assume it will be a no from a lender if there is some form of adverse credit on there as there could well be an option available.
Please be aware that by clicking on to the above links you are leaving the Upperton Advice website. Please note that Upperton Advice nor HL Partnership Limited are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH REPAYMENTS ON YOUR MORTGAGE.
THIS FIRM DOES NOT CHARGE A FEE FOR MORTGAGE ADVICE.
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