Mortgage Credit Checks

Credit checks are an integral part of the mortgage application process. Lenders are obligated to review your financial history before they approve you for a mortgage, and they will do this by taking a deep dive into your credit reports.

Mortgage providers will always review your files for due diligence purposes, but it’s possible to check your own credit ahead of an application.

Here you will learn how to check your credit score, what lenders look for when reviewing it, and why credit checks are vital ahead of a mortgage application.

How to check your credit ahead of a mortgage application

You can check your credit reports with the UK’s main credit references agencies for free by accessing a free, cancel-anytime trial with our affiliate partners, Checkmyfile, below:

Find out your credit score today

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Checkmyfile is free to use for 30 days with no obligation to sign up for a premium account. The service will provide you with a multi-agency report that shows you your credit score with each of the UK’s main credit reference agencies, Experian, Equifax and Transunion.

If you wish to use the service beyond the trial, it will cost £14.99 per calendar month.

For those looking for an alternative to Checkmyfile, we recommend UKCreditRatings, which offers many of the same features and services and a month-long free trial.

What to look for on your credit files

First and foremost, it is worth being aware of your credit score with each of the three credit reference agencies, but be aware that each of them score very differently:

• Experian: Assigns credit scores of 0-999, with scores over 881 considered ‘good’

• Equifax: Assigns credit scores of 0-1000, with scores over 531 considered ‘good’

• TransUnion: Assigns credit scores of 0-710, with scores over 604 considered ‘good’

While it’s worth taking note of your score and understanding what it means for your mortgage prospects, keep in mind that there are lenders who don’t use credit scoring to assess applicants. They will still check your credit report for any issues and review the circumstances surrounding them, but numerical scores are irrelevant to them.

If you wish to find out more about how credit scoring works, see our guide to credit scores, but remember that it could still be possible to get a mortgage whatever score you have.

Adverse credit

As well as noting what credit score each agency has assigned you, it’s a good idea to check whether any of the agencies have adverse credit recorded against your name.

Most mortgage applicants will be well aware of the credit problems they have had in the past, but it’s not unheard of for people to have bad credit they didn’t know about.

Adverse credit, including severe issues, will disappear from your files after six years, so if you have had some in the past, checking your credit reports will show you the status of it.

Credit problems to look out for on your files include:

• Late payments

• Missed payments

• Defaults

• Bankruptcy

• County court judgments (CCJs)

• Individual voluntary arrangements (IVAs)

• Repossession

• Debt management plans

• Debt relief orders

It can still be possible to get a mortgage with the above on your files, but specialist advice is recommended as some lenders may decline you or charge a higher rate of interest.

Inaccuracies and outdated information

Keep an eye out for any incorrect or outdated information on your credit files as errors and omissions can have an impact on your credit score and creditworthiness.

You should review all of the personal information on your files as well as your financial history, including address history and public records, to make sure it is current.

Any errors or omissions should be reported to the credit reference agency that is listing it. They will work with you to correct the issue if you can provide proof it shouldn’t be there.

What credit checks will your mortgage lender carry out?

There can be several credit checks during the mortgage application process, but as a bare minimum, most mortgage lenders will carry out the following…

1. Soft credit check during the agreement in principle phase

Most mortgage lenders will offer you an agreement in principle (AiP) before you progress to full mortgage application. This is a non-binding arrangement that confirms how much you can potentially borrow and on what terms, but it is no guarantee of mortgage approval.

To get an AiP, most mortgage lenders will conduct a soft credit check to get an idea of your creditworthiness. This will not leave a permanent mark on your credit files, will do no harm to your credit score and won’t put any future applications for finance at risk.

Please note that some lenders skip the AiP stage and progress straight to full application.

2. Hard credit check at the point of full application

When you progress to full application, your mortgage lender will take a closer look at your credit history, focusing on the last six years, to get a clearer picture of your creditworthiness.

This will be a hard credit check that will leave a footprint on your credit files which other potential creditors can see. Too many of these checks over a short period can be a red flag to lenders as it suggests you might be borrowing too often or being rejected for credit.

• Credit history

• Credit approvals and rejections

• Repossessions

• Bankruptcy

• Credit use

• Outstanding and previous debt

• Hard credit checks from other providers

• Income and other sources of capital

• Overdraft usage

• Personal information such as address history

During the process, an extra level of checks will be carried out by the lender’s underwriters. This is essentially to cross-check your application for potential issues and risk factors. You may be subjected to additional underwriter scrutiny if you have a history of bad credit.

3. Final credit check before completion

Not all mortgage lenders carry out an extra credit check at the end of the application process, but they might deem it necessary if they think your situation has changed.

The mortgage application process can be lengthy and it’s not uncommon for borrowers to develop new credit issues, resolve existing ones (unrelated to their mortgage application) or their personal circumstances to change while getting their property purchase over the line.

If your lender has any reason to believe a late change in your situation might put your ability to repay your mortgage at risk, they might carry out a final credit check before completion.

What to do if a lender declines you after a credit check

If a mortgage lender has declined your application after carrying out a credit check, it obviously means they saw something on your files they don’t like, and consider you too high risk to offer finance to. This, however, doesn’t mean you are out of options.

There are steps you can take to get your homeownership plans back on track in the event of a rejection, but first, resist the temptation to re-apply for a mortgage straight away. This would mean undergoing another credit check and put you at risk of having too many rejections on your files in a short period of time, a serious red flag for lenders.

Your next course of action should be to speak to an independent mortgage broker, like us at Teito. Our advisers can explore the reason your application failed at the credit check stage and look into whether there are grounds to renegotiate with your lender or find a new one.

They can also establish whether there are any quick fixes you could apply to improve your credit position and boost your chances of approval the next time around.

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What’s the difference between credit checking and credit scoring?

There is an important distinction between the two as all mortgage lenders credit check, but not all of them credit score. Simply put, credit checking is a review of your credit files to establish how creditworthy you are, while a credit score is a numerical rating assigned to your credit report by a credit reference agency, such as Experian, Equifax or Transunion.

Some mortgage lenders use one or more of these credit reference agencies to help them assess mortgage applicants and will consider the scores they have assigned when considering eligibility, but there are mortgage providers who don’t use credit scoring.

These lenders will still review your credit files, as it’s important for them to be aware of any issues, but they won’t be interested in the scores assigned by the reference agencies.

It is usually specialist lenders who don’t use credit scoring and their approach is generally more flexible for borrowers with a history of bad credit. Rather than dismissing an applicant with a low score, they will take a closer look at the reasons for that score.

Lenders who don’t use credit scoring include:

• Pepper Money

• Bluestone

• Kensington Mortgages

• Scottish Building Society

• Furness Building Society

• Vida Homeloans

Compare rates from lenders who don't check scores

As mentioned above, while all lenders will look at your credit file, they won't all pay attention to the scores. We've set our free mortgage tool to return results from lenders who dont' use credit scores in their assessment, however, you can customise your search by deposit size, loan type, term length, and al lenders under the ‘More Filters’ tab.

You can also speak to one of our experienced brokers if you need more help to find the right deal for you.