Credit Scores and Mortgages

Most mortgage lenders check your credit before lending you any money and different credit agencies can bring back different results. A seemingly complicated topic leaving new buyers stumped.... not for much longer!

Who are the main credit referencing agencies (CRAs) in the UK?

- Equifax

- Experian

- TransUnion

Most UK mortgage lenders will use one or two of these agencies to check your credit score, CRAs collect data such as address histories, electoral rolls and debt management information allowing them to give you a specific score but the information can vary from agency to agency.

It is vital to remember that some lenders don’t send information to certain CRAs. For example, you may have a mortgage with a lender who do not report to TransUnion, so if you were to produce a TransUnion credit report, you wouldn’t see any account of that mortgage.

What do lenders use when checking your credit?

Funnily enough, lenders do not use scores directly from CRAs. They only use the data because they have their own scoring criteria, so whilst your Equifax score may be high, it might not be as high when running a credit check with a lender.

What is the difference between a credit check and a credit score?

Not every lender requires a minimum score but will may still want to carry out a credit check instead to ensure there is no adverse credit. This can be helpful to remember in a few circumstances such as being abroad for many years or even having no active credit.

Hard searches vs soft searches

Hard credit search

- When a lender checks your full credit report via a CRA, this is more invasive as this leaves a mark on your credit file and other lenders who carry out any searches can see this and even see if you were accepted.

- Doing many “hard” searches in a short period of time can impact your credit score so be sure to inquire if you will be subject to a soft or hard search.

Soft credit search

- This is less invasive as this type of search will not be seen by anyone else but you. A prospective lender can partially view your credit report and will not leave a record of this.

- You can do as many soft searches as possible and this will not impact your credit history.

What credit score do I need to have for a mortgage application?

As you would typically expect; the lower the rate, the higher credit score you would need. Every lender has different credit scoring requirements. High street lenders offering low rates usually want higher scores whereas specialist lenders who offer mortgages for adverse credit would normally have lower requirements.

Can I get a mortgage with a low credit score?

The mortgage market is diverse and robust meaning there are plenty of options if there’s adverse credit on your file or even just a low score. This of course means your choices may be restricted, you would not have access to the lowest rates in the market but there’ll certainly be options.