About to apply for a mortgage? Check your credit score first!
Buying a property requires financial preparation. It is not just how much deposit you have and how much you can afford to pay each month. For the bank to lend you money, you also need to be creditworthy.
Well, yes. You need to have a good credit history and good credit score to get the best mortgage offers.
What is a Credit Score?
A credit score is a numerical value that you are given based on your credit history. The number is defined by a credit scoring agency. There are three main ones: Experian, Equifax and TransUnion.
These agencies are completely independent of each other and would have a different scale and criteria to assess your score.
What is a credit report?
A credit report is issued by one of the credit scoring agencies and contains a detailed financial history from the last 6 years. The credit report will list all your bank accounts, credit cards, bills and phone contracts and most importantly your payment history.
If you have had any missed payments, defaults or arrears, it will show on your credit report. It will also contain any public records of court judgments, bankruptcies and insolvencies.
Usually, when applying for a mortgage, the lender will check your credit report with one of the agencies and base their decision on your score and your credit history.
It is worth mentioning that the more issues you have had, the more difficult it might be to get a mortgage. However, there are plenty of lenders that accept applicants with not so great history – check our blog post – Bad Credit Mortgages.
How can I check my credit score?
You can check your credit score and your credit history by applying directly with the agencies or you can use CheckMyFile, which lists all three.
CheckMyFIle will combine all information that is listed on each of the agencies’ databases and display it all in one place.