The Definitive Guide to Your Credit Report

The Definitive Guide to Your Credit Report

Applying for a mortgage and purchasing a new home is an extremely exciting time for any home buyer. However, when looking for a mortgage, all applicants need to consider their credit report and the role it plays in the success of your mortgage application.

The Definitive Guide to Your Credit Report

What is your credit report?

Essentially, a credit report is a detailed report of your personal credit history, which includes mortgages, credit cards, mobile phone contracts, overdrafts and can include some utilities such as electricity, gas and water. People over the age of 18 who have taken out credit at some point in their lives are likely to have a credit report held by a credit reference agency.

Your credit report provides lenders with a snapshot of your credit accounts, essentially an insight into how well you are managing and coping with your finances. A lender can only look at your report with your permission and will use it along with the information provided on your application, and any information that they might already have to decide whether they can offer a mortgage. This will be decided by calculating a credit score.

A number of things can contribute to your credit report and your credit score. Negative marks can be caused by:

CCJs – A County Court Judgement in which someone is taking action against you following a missed payment

Default – The failure to meet the legal obligations (or conditions) of a loan, such as a home buyer failing to make a mortgage payment

IVAs – An individual voluntary arrangement for those attempting to avoid bankruptcy

A number of other factors can also contribute to your credit score. You can prevent further negative marks by performing soft checks, which do not leave a ‘footprint’ when other lenders check your history.

Where can you get your credit report from?

You can check your credit report with three main credit report agencies. These agencies are.

  • Experian
  • Equifax
  • Callcredit (Under the brand name Noddle)

All 3 of these agencies have a statutory obligation to provide people with their credit report when requested. You are able to access your credit report online or by asking for a written copy, which each agency is obliged to provide for a fee of £2.

It is worth getting a copy of your credit report from all three agencies if you haven’t looked at it for a long time, or if it is your first time applying for it. Different agencies can have credit information from different lenders (however, there is a lot of overlap between them).

Which credit report is best?

In judging the usefulness of each credit report, it is worth understanding their usage amongst lenders. Many of the main high street name lenders will choose to use Equifax or Experian. For example, Experian is widely used by the likes of Nationwide, HSBC and Santander, whilst Natwest and Royal Bank of Scotland choose Experian as their credit report of choice.

Each credit has its set of features related to the service.

Noddle

  • Free for life credit reporting
  • Unlimited online access
  • Monthly updates
  • Online dispute capability to help you correct any errors quickly and simply

Equifax

  • Monthly Subscription – FREE 30-day trial
  • Unlimited online access
  • Expert tips for improving credit ratings
  • Support from a customer care team
  • Weekly alerts of significant changes to your credit report
  • ID surveillance to help protect against identity fraud

Experian

  • Monthly Subscription – FREE 30-day trial
  • Expert advice on improving your credit score
  • Access to UK Customer Contact Centre and dedicated Victim of Fraud team
  • Weekly alerts of any changes to your credit report

Can you get me a mortgage even with a bad credit report?

Your credit report is an extremely important part of the application process for mortgages. Much of the success of your application can hinge on your credit score and the financial picture that your credit report paints. However, applicants with a history of adverse credit or a bad credit score needn’t despair. There are lenders who specialise in placing mortgages for applicants with a history of bad credit, and Just Mortgage Brokers are committed to working with such lenders to find you the perfect deal to make your dreams of owning your own property a reality. Regardless of your credit history, we are often able to find the mortgage suited to your specific needs.

That being said, applicants with a history of adverse credit should always look for ways to improve their credit score and overall financial position. Applicants might consider.-Reduce overspending where possible, cut down on monthly outgoings as needed. E.g. Named brands in grocery shopping

  • Use credit cards less and more wisely when it is required to use them. Do not use them as a cash flow solution
  • Look to increase income where possible. Perhaps look for a second job, or apply for a promotion?
  • ALWAYS pay debts and bills on time.
  • Never make use of payday loans as a debt solution.

We understand that it can be difficult to make such changes, but a healthy credit report should be an incentive, leading to better opportunities in obtaining the mortgage that you need.

Do I need a credit report?

It is possible to obtain a mortgage without a credit history, but mortgage lenders will require a copy of your report even if you have no credit history to show. Not having a credit history can make it difficult to obtain a mortgage, as lenders will not be able to recognise you as a reliable investment.

If you would like to discuss your credit report with a skilled adviser from the Just Mortgage team, get in touch today. You can call us on 0800 114 3575 or use our contact form. Alternatively, you can email us at [email protected]