North East Connected

Cant get a mortgage because of your credit file

Getting a mortgage is never easy and if you have had credit issues in the past it is a lot harder.  But don’t be disheartened, not all lenders use your credit score.  A credit score is the rating the credit reference agency has given you.  If you are using Experian then you will get a rating up to 999.  Noddle, Call Credit and Equifax give you a rating up to 5.  Your credit profile may differ from company to company.  They will not always be the same so do not rely on one.  Most lenders use Experian and I would always look at your experian report first if you suspect you may have had missed or been late on a payment within the past 6 years.  At the moment you can receive the credit report for free for 30 days.  If you do not cancel the report within 30 days a charge is payable, so remember to cancel it when you have a copy if you don’t wish to incur these charges.


Every mortgage lender has a different approach, most of the High Street banks will go back for the full 6 years.  If you were late on a credit card payment for 1 month in 2010 it is not going to have an affect if all payments are made on time after this, you should be fine.  If you defaulted on a payment then it could decline.  Even if it was cleared in 2011 and you have not missed anything since.   A default is registered on the credit file as 8 Missed payments.  Ever month you are late or miss a payment it is listed as number.  If you miss one payment it is recorded as a 1 if you miss six payments in a row it is recorded as a 1,2,3,4,5,6.  Easy really.  Lenders look at the whole profile and how you have conducted your finances not just the score given by the agency.  All lenders use a computer system, and this gives us three answers.  Yes, No and referred.  Yes and No is straight forward while a referred normally goes to a human underwriter.  Someone we can often speak to and discuss the situation.   If it is a No in some cases we are allowed to appeal this, if we think the credit file is incorrect or we think it fits criteria.  But we need to have the facts and proof of everything.  It is not enough to say you don’t know why it’s on there.


You credit score can be affected in a number of ways, just this week we had a client with a reasonable credit score but her only credit card had a limit of £600.  She was using £550 of this,  it was money she built up over Christmas.  The credit score system listed her as using over 90% of her available credit.  This raised a flag with a lender.  Why did she only have £600 credit limit on her card?  They do not ask the question they just assume the credit card company has reduce the limit.  Not that the client has never requested the limit be increased.  Using all available credit again the credit agency has not reviewed the full profile.  She had nothing in November and £550 in January.  Come the end of February this could be cleared.  But a computer will never pick that up.  But options are available, you just need to look for them and know where to go.


Another issue with lenders can be the Loan to Value (LTV).  Loan to Value is the amount the mortgage company own of your property as a percentage.  95% mortgage, they own 95% of your property, 60% LTV they own 60%  you get the idea.  The more risk, the tighter criteria ,the higher the interest rate.  So you may be declined for a 95% mortgage but pass at 85%.  Some lenders even tell you where they would be happy to lend.  So you may get a decline but then corrective actions may indicate a lower LTV would be acceptable.


Sometimes getting the mortgage with a High Street bank can be harder than some of the smaller lenders.  A smaller lender may only look at the credit file over 3 years and not 6.  The rates can be as competitive so you may well get a deal that is suitable with a lender you do not know.  The down side to a smaller lender is the income or affordability process.  I will go through affordability another time but with some High Street lenders giving you up to 5 times your income and the lowest multiple as low as 2.5 times all based on your affordability.  You need to fit the credit profile and then fit the affordability.  Not always straight forward, but thats why you should use a mortgage specialist, you have options not always available to the public and with lenders who you may not know.  Every mortgage lender has a different criteria and lending proposal.   It’s all about finding the right one that suit your needs and requirements.


At Good Mortgage Solutions, we take time to find out about you, what you want and find the mortgage that suits your needs and requirement.  We have experience with all the lenders and the processes.  We deal with the surveyor for the valuation, the solicitor for the legals and the lender for your mortgage.  Our meetings are free and you are under no obligation to use our services.  Give us a call 01642 671747 or email  we are more than happy to help.  Good Mortgage Solutions working with you for you.



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