After the 2008 mortgage bubble and crash, mortgage companies have been under a greater duty to make sure that borrowers are able to pay their monthly payments even if mortgage rates increased significantly. This means that more detailed enquiries will be made to confirm your household income, expenditure and the reliability of your cashflow.
In addition to stress testing the borrower’s finances, the lender will undertake ‘credit checks’ to establish a borrower’s credit history including any evidence of bad debts or loan defaults. Credit checks are now quite sophisticated. Your age, employment details, where you live, who you bank with and for how long, whether you borrow money elsewhere and if you pay it back as agreed; all of these things are considered in an effort to ‘profile’ your likely risk and your profitability to the lender. For example, if you are not registered to vote or you have never borrowed any money or entered any contract for a utility, this will affect your credit rating.
Knowing your budget and living within it is good practice for all of us, but if you have a phone contract, a credit card and a broadband bill and you pay them regularly, on time, this will all help to improve your credit profile. Make sure you don’t apply for credit you don’t use as every application is noted and if you don’t take up credit (or it is refused) a lender may draw conclusions that are harmful to your score. Obviously, judgements against you in court (only for credit related matters or fraud) are likely to be detrimental to your score, although criminal records cannot be searched by lenders, They can, of course, ask you and you must not lie.
Many UK lenders use one of the main credit agencies such as Experian, Equifax or Call Credit, with Experian being the most widely used for mortgage applications. These agencies collate a picture of your past credit history to better predict your future behaviour.
Related Blog articles:
For more information or to speak to a mortgage adviser contact us on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
The average age of a first-time buyer in the UK is two years older than 10 years ago. This is understandable with managing the cost-of-living and challenges within the economy such as high interest rates making it difficult to get onto the property ladder.
Delayed Start Mortgage from Skipton
8 days ago
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
13 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
16 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
The Impact of Klarna on Mortgage Applications
17 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
22 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
14 Apr 2025
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
14 Apr 2025
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
More information
Trusted by
