Secure your mortgage application with a healthy credit score
A mortgage is the biggest financial commitment you will ever make, and often the most significant monthly outgoing from our bank accounts. We carry this debt around with us for the majority of our lives, so it is essential that lenders understand and make an informed decision by analysing your spending habits and affordability criteria before agreeing to lend you a mortgage loan.
The information held within your credit report, along with your overall credit score, carry huge weight in terms of your favourability to lenders, whether you’ll get a mortgage and what rate you will pay. Other factors also come into this decision too, such as the amount of debt you owe, your savings, value of your total assets, level of income and your credit history with lenders.
In short, maintaining a healthy credit score will allow you to access a wider pool of lenders, and get a better mortgage deal.
What is classed as a ‘good’ credit score for a mortgage application?
Knowing your credit score is one thing, but it is essential to know where this falls in terms of favourability to mortgage lenders. Credit scores range from 0 - 1000. A credit score that falls between 800 -1000 is considered to be excellent, and if above 700 then you can rest assured that this is in the healthy bracket. Anything under 700 is worth working on to improve before you approach a lender and begin the mortgage application process.
Will a mortgage payment holiday I’ve taken during the Coronavirus pandemic affect my credit score?
The FCA says lenders should ensure the temporary measures don’t impact credit reports and scores. If you have requested a mortgage payment holiday due to the Coronavirus pandemic, then it’s important that you wait until you have approval from your lender, so that you don’t end up missing a payment, as this will impact negatively on your credit score.
An agreed payment holiday won’t be recorded in your overall credit report. Once you have agreed the payment holiday duration, the credit checking agencies will apply an ‘emergency payment freeze’ to the relevant credit record on you, meaning that your score is protected during this time.
However, lenders will be able to check OpenBanking for evidence of payment holidays in future, and the FCA have confirmed that this may be taken into account as part of a lender’s mortgage application in future in their mortgage payment holiday guidelines.
Does checking my credit report harm my credit score?
Absolutely not. Requesting access to your credit report and checking your score will not harm your credit score.
How can I improve my credit score in preparation for a mortgage application?
There are several steps you can take to make immediate changes to improve the health of your credit score, and make yourself more attractive to mortgage lenders. We address these in our free guide to improving your credit rating which you can download at any time and work your way through.
If you are in the dark about your credit score and need to take stock of your full credit report, then you can use our recommended multi-agency credit checking services to shed some light on that all important number, before progressing with your mortgage application.
Once you know your credit score, feel free to get in touch with Tony to discuss your next steps in the mortgage application process.
We charge an administration fee of £395 for property purchases and re-mortgages. This is payable on application. Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage.