This is a brief guide to some of the mortgage criteria for mortgages in the current market part 1 credit reports.

 

 

This is a brief guide to some of the mortgage criteria for mortgages in the current market part 1 credit reports.

Mostly all mortgage underwriting by a lender will be firstly guided by your credit profile, so the first step before approaching a Broker or mortgage lender directly is to apply for a full credit report.

You have many choices when applying for a credit report, there are 3 main credit score, report suppliers in the UK that are used by lenders.

Experian

Equifax

Tran’s union (formerly Call credit)

Credit reports: what information is included?

 

Some of the information held in your credit report will come from banks, building societies and credit card companies you have borrowed from in the past, or that you currently owe money to. Other facts on your credit file may come from publicly available sources (such as the electoral register) or be supplied by utility companies.

 

 

What's included?

 

Your name, address and date of birth

 

Whether you are on the electoral roll at your current address

 

How much you currently owe lenders

Any late payments on existing or past credit card or loan accounts

Any missed payments on existing or past accounts

Any County Court Judgments (CCJs) made against you

Whether your home has been repossessed or you have moved away owing money

Whether you have been declared bankrupt or entered into an Individual Voluntary Arrangement (IVA).

 What's not included?

The amount of money in your current account

your salary

Savings accounts

Student loans

Criminal record

Medical history

 

Parking or driving fines

Council tax arrears

It is possible to dispute anything that you do not agree with on the credit report, if you really believe is an error, E.G things like incorrect name spelling, incorrect address details, missed payments that you don’t agree with, an incorrect default on the report etc. You can write to the relevant agency to dispute the entry if it is disputing something that is negatively impacting your credit profile sending proof of why it’s wrong would be needed for your claim to be successful . They will have 28 Days from your request, to tell you it has removed the entry or not, the entry on your file will be marked as disputed and resolved or not.

If the credit reference agency does not amend the file. It is possible to add what’s known as a 'notice of correction' (up to 200 words) to your file. This can be used to explain why you think a particular piece of information is wrong or to highlight any mitigating circumstances – for example, a sudden bereavement that may have caused you to miss a credit card or loan repayment.

There are many places you can get your credit report from these 3 agencies , there are a fair few of them that offer free access to the full report , for example https://www.moneysavingexpert.com/creditclub/ from this link you can access the full credit report from Experian for free . So it’s worth doing some searching on Google to find one that offers a free or one that offers a free trial for the initial first month for the agency you need the report from.

 

 

 

What mortgage lenders are looking for?

It is a myth that, all lenders are just looking for a good score, lending is mainly based on factors that should reflect in your score but often do not.

1.      Voter’s role information, do you show at the address on the report as per what is required as a minimum address declaration which is 3 years for most lenders.

2.      Is the name and date of birth on the report matching the name and date of birth on your ID passport, driving licence etc? If it’s doesn’t match it could cause problems applying for the relevant mortgage unless it is corrected as mentioned above on how to get it corrected.

3.      The payment profiles the zero, and numbers that show how many payments late you are on a credit item, if it shows all zero’s then it means you haven’t missed any payments as far as the credit report is concerned. High street lenders usually have a cut off for how many credit accounts you can have with missed payments, with some lenders having a zero tolerance for any missed payments.

4.      Defaults, usually once a credit account reaches 8 missed payments, it will show as a default, if you have a current default this could mean you are not acceptable to a vast amount of lenders and could require you to approach a lender that accepts adverse credit. If a default has been paid off then it will show as paid off on the report and will be looked on more favourably by the potential lender.

5.      County court Judgments, this is when the credit item has reached default and no acceptable arrangement has been made with the credit item provider and they have taken this matter to court, the court has then made a judgment that will appear on your file in the credit providers favour , this will usually , include the amount owed plus fees for the court and interest , it will vastly reduce your choices of lenders if you have a county court judgement , the more recent it is the harder it makes applications for a mortgage . Subprime lenders do have written criteria on what they will accept; this is when it would be advisable to approach a knowledgeable mortgage broker who would know what lender to try for you. It will make a difference if the county court judgement has been satisfied by paying it off, the report will reflect the date that this has happened.

To be continued part 2 income multipliers used by mortgage lenders.