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Why does your credit rating matter if you get a mortgage?

Tuesday 25 January, 2022

If you want a mortgage, it’s important to review your credit rating as lenders may check it.  In this article Oliver our mortgage broker in St Albans reviews the differences between hard and soft credit searches and considers what you can do to improve your credit rating.

What is a credit search?

When you want to buy a house, the lender may run a credit report so they can see how you manage your finances to see if you have any outstanding debts.  

What are the differences between hard and soft credit searches?

There are two types of report, a soft search, and a hard search.  Soft searches, sometimes called ‘quotation searches’ or ‘smart searches’ do not impact your credit score or affect any future credit applications as they are not visible to other lenders.  If someone has done a soft search on you, it will be on your credit record for the following twelve months so if you check your report it will appear.

Why do a soft search?

Even if you check your own credit record it will appear as a soft search, but there are no limits on how often you want to check it.  It allows you to check what credit deals you can apply for without ruining your credit score.  There are also many reasons other companies may want to check it.  It allows anyone to check your identity and other information you have provided, and it is often carried out by employers in pre-employment checks.

What is a hard search?

This is an in-depth review of your credit history.  It will show any County Court Judgements (CCJ’s) and defaults on payment.  Lenders can review your financial history over the previous six years.  Whenever you apply for a new credit card, loan, mobile phone contract or an overdraft a hard credit card check is completed.  

Oliver, mortgage broker, St Albans, Hertfordshire said:

‘Clients are sometimes confused about the differences between hard and soft credit searches, so it’s important we always explain the importance of your credit rating before we offer mortgage advice and recommend a new mortgage product.   Hard searches can affect your credit rating as lenders can see them.  If you have multiple searches in a short-time period it could make them concerned.  However, we always remind clients who think they have a bad credit rating that there are things they can do to improve the situation.  We always recommend clients use soft search eligibility checkers before they apply for any credit and consider minimising the number of hard searches that are done around the time they apply for their mortgage.  As discussed in the article all the hard credit searches disappear after a year, so in the worst-case clients must wait until then to apply for their mortgage.  If you think you have a poor credit rating call us now on 01727 845500.  We can discuss your credit rating and offer personalised mortgage advice, whatever your situation.’

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.


Do you know what your credit score is?

Do you know what your credit score is?

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