Applying for a mortgage and purchasing a new home can be an extremely exciting time for any home buyer. However, when looking for a mortgage, a poor credit score could represent a major obstacle. Many people who we come across are not aware of what constitutes a poor credit score or how bad their ‘bad credit’ is.
There are 3 main companies that mortgage applicants can use to get their credit score. These are Noddle, Equifax and Experian. The important thing to note is that they will all provide different results, which begs the question, do you need to check all 3?
If you’re checking out of curiosity, a quick check on Noddle is all that is required. Noddle can provide your credit report completely free of charge with no initial trial period or monthly subscription fees.
There are, however, situations when it is highly recommended that you check all of the above-mentioned credit reference agency records
- If you’ve been recently, and surprisingly, rejected for credit, you may have errors on your credit file that need correcting. Or your identity might have been stolen.
- If you’re planning on making an important credit or mortgage application soon. Even if you are 99.9% sure your credit file is spotless, you should still check, in case of a troublesome error that you weren’t aware of.
- You’re planning to clean up your credit records after insolvency.
When checking a credit report, be sure to check every detail, not just the headline “score” and the list of your debts.
When checking your credit score, anything in the 680-740 range is considered good by the credit reference agencies, with 700 being the target threshold. If your score is considerably lower than this, then it could be considered a bad or low credit score. However, the question arises as to the relative importance of the term bad credit.
Essentially, your credit score means very little until a lender decides what they’re doing with it. Your credit score will go mostly unnoticed throughout your lifetime and often you will not know what it is. However, when it comes to arranging a mortgage, bad credit can have very real consequences.
Bad credit presents an obstacle to potential borrowers as most lenders will generally view those with bad credit as a higher risk on their part. Bad credit should be taken very seriously and being diligent with your credit score will prevent any nasty surprises when you look to purchase a property or re-mortgage.