More people realise the importance of having a good credit rating and the importance it holds.
After getting in touch with us, we found that a large majority had already researched online and found a copy of their credit report.
There are various credit reference agencies to choose from, but the two most common companies you may have heard of are Experian or Equifax.
We would highly recommend to new customers to use Check My File. In doing so, you will find an easy to understand report that offers customers a collation of information from various sources.
Check My File offers a 30-day free trial. After 30 days, the monthly fee is £14.99 a month, although you can cancel this at any time.
Often, clients ask if we will be doing a credit search on them because they know that too many searches can harm their credit score.
The lender will always run their credit checks, but our mortgage advisors ask the customer for permission first.
You will find that credit searches will come in two forms; hard searches and soft searches. Here we will delve into the difference between the two and how they can help.
A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is that because the lender is looking into your situation quite closely if you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed or it turns out you have provided false details.
The bad news about a hard search though is that it leaves a “footprint” on your credit file. So anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing. However, several footprints registered in a short period of time could look like you applying for lots of credit at the same time. The footprint does not state whether your application was successful or not. If you have several searches over a few weeks then lenders’ systems could wrongly assume you are being declined on the basis that “Why else would you go to lender number 2 unless Lender number 1 had said no?”.
The odd hard footprint on your record from time to time is no big deal so there’s no need to worry too much about this, just be careful not to have too many.
A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites to give you an indication of what products might be available to you. A soft search is also carried out if someone wants to verify your identity.
Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. The financial institution doing a soft search obtains less information about you than if they had done a hard search. However, an agreement in principle from one of these lenders is usually still an extremely strong indication that your full application will be accepted.
The really good news about soft searches is that whilst you will be able to see that someone has carried out a soft search on you if you check your credit file (people are often very surprised how many soft searches have been carried out on them!) these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage without it damaging your credit score irrespective of whether it is successful or not.
Looking to make an offer on a property? I always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price. That way you can present yourselves as having your finances in place. You are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.