Initial advice about credit reports that you must know about and how you can turn that into mortgage success.
At Flex Financial, when we speak to our clients about their future aspirations, we are often met with the answer of:
“we are looking to buy our first home”
“We want to find another remortgage deal”
“what do I need to do, in order to buy a Buy to Let property?”
Our answers can vary depending on the dialogue but there is one fundamental that all mortgage applicants have in common; your credit report and how this can affect your application.
What we do at Flex Financial
Built into our process at Flex Financial, is that we always ask clients for a copy of their credit report. “why?”, you may ask…
A credit report shows your financial footprint for at least the previous 6 years. It shows:
- Your account conduct
- How you have managed your accounts
- Do you have any late/missed payments, arrears, defaults or CCJ’s.
- The number and details of all loans/credit cards you have had
- Payment history for the above along with the balances and how much you have paid each month.
Scary, eh? All of this is accumulated into a score. You may already have Experian and see 920/999 (that’s good!), but how is this used in relation to mortgage applications?
During the application process, mortgage lenders will conduct a credit search which is effectively the lender scanning your credit report for issues. Depending on your credit report, it will determine what lenders criteria you meet and who you may be eligible for. Not checking your credit report prior to any such finance arrangements is risky business. It could mean that you may fail the lenders agreement in principle (AIP) and if the check is a hard search, it could impact your credit rating.
Additionally, higher interest rates may apply depending on your credit profile which in turn can create more stress, frustration and time wasted. You certainly don’t want this when you have found your dream home or under time constraints to remortgage!
Commonly Known Credit Referencing agencies
There are many widely advertised credit reporting agencies and some of you may already be signed up to some of them. We often speak to our clients about Clearscore, Equifax, Call Credit, Experian, Credit Karma (formerly Noddle). If you already have access to one of those, that’s great – It shows you are continually monitoring your credit profile. Many of our clients often ask us – which credit report is best to use?
What credit report is best to use?
Our answer is simple, the majority of lenders use the UK’s two largest companies – Equifax and Experian. They can be used in isolation by the lender or a combination of the two. As they are separate companies, they don’t always seem to show all your information nor do they report in the same ways. For example, we have seen previously where a historic CCJ was not shown on Experian but it was on Equifax. More often than not, It is not found out until later down the line at agreement in principle or full lender underwriting.
This can be avoided and most good mortgage advisers will require a copy of your credit report at the outset. This can ensure they have accurate and up to date data for you. Now, I’m not saying you need to go around and spend an evening registering for every credit referencing agencies as that would be a pain. Instead, we could be with our feet up watching corrie.
What Flex Financial Recommend
The credit referencing agency that we tend to recommend is “check my file”. The reason is that it is a multi-agency report encompassing all the UK credit referencing agencies in one place. If your adviser knows what they are dealing with at the beginning, it can help speed up the research and application process. As a Result, Since we started using check my file with clients, we have seen far fewer problems and greater accuracy in the data being reported and in turn = mortgage success.
You can access Check my file by clicking here, it’s free for 30 days and thereafter a monthly subscription of £14.99. You can also cancel at any time.