There’s no getting away from it, it’s harder to get a mortgage than ever before. This is due to issues such as increased regulation, tighter underwriting and stricter affordability requirements.
If you are looking for a mortgage, especially if you have a low credit score, complex income, are self employed or have any other circumstances not considered ‘the norm’, failure to have your ducks in a row before applying will make things even harder.
You could end up being offered a lower loan amount, higher interest rate or even being declined all together.
However, a little bit of preparation can make all the difference. This is where important documents like proof of income and banks statements come into play, but equally important is the information on a credit report.
WHY IS A CREDIT REPORT IMPORTANT?
A credit report shows the information a lender will see when they carry out their search. By having this information beforehand, you can pre-empt any issues and know exactly how much each of your credit agreements have outstanding AS PER THE CREDIT REPORT (this is what a lender will go by, not the actual balances as in most instances there is a time delay).
WHAT ABOUT THE TIME, EFFORT AND MONEY?
Nowadays everybody has access to their own credit report and there are many ways to obtain these without any cost and online with minimal effort.
I DON’T WANT MY SCORE TO BE AFFECTED
By obtaining this information, your credit score will not be affected as it’s NOT A CREDIT SEARCH, it’s a CREDIT REPORT. It’s simply information on your credit agreements that will help you with your financial planning (not just mortgages, but monthly household accounting etc).
Mortgages aside, these documents should be monitored as closely as your payslips / accounts and bank statements in terms of prudent personal financial management.
DOESN’T THE LENDER CARRY OUT A SEARCH?
Yes, but it’s best to know what’s going to be on it before they do.
If something is overlooked, there could be an issue over non-disclosure or discrepancies which could lead to delays, an effect on a person’s credit score or worst of all, a decline. Is it worth the risk for a bit of forward planning?
You may think that everything is fine. However, in our experience we would estimate that over 80% of people that don’t regularly monitor their credit files find something that surprises them when they finally look at their report.
Furthermore, it’s very common for information to come to light after an agreement in principle or application has been made. This can create issues (and of course register a credit search) which could have been avoided if a credit report had been properly assessed beforehand.
It’s also important to note that credit SCORES aren’t worth a great deal when it comes to mortgages. While they might be a good indication, each lender has their own credit scoring system so an ‘Excellent’ score with a credit reference agency doesn’t necessarily mean automatic acceptance. Every lender is different so it’s best to properly assess credit reports before applying.
To summarise, failing to plan is planning to fail. This is certainly the case when it comes to the modern mortgage market.
Times have changed. Credit reports are a vitality important tool with both mortgage planning and personal financial management.
They can be free, quick and easy to obtain and can make all the difference. Don’t make arranging a mortgage harder than it needs to be.