Credit Checks during the Mortgage Application

What is a Mortgage Credit Check?

When you apply for a mortgage, lenders perform a credit check to assess your financial history and evaluate the risk of offering you a loan. Depending on what the lender finds in your credit report, your application could be accepted or rejected. However, different lenders have varying eligibility criteria, so past credit issues won’t necessarily stop you from securing a mortgage.

There are two main types of credit checks, and it’s important to understand how each can impact your credit rating:

Soft Credit Check

A soft credit check is used to see if you might qualify for a loan without performing a full search. This type of check is visible only to you and doesn’t affect your credit score. It is commonly performed early in the mortgage process, such as during pre-approval.

Hard Credit Check

A hard credit check looks at your complete financial history, including previous credit applications and repayment issues. This leaves a visible footprint on your credit report, which future lenders will see. Multiple hard checks within a short time can negatively impact your credit rating, as it may appear that you’re financially stretched.

When Do Mortgage Lenders Perform Credit Checks?

Lenders usually run credit checks at two key points in the mortgage process:

1. Early in the Application Process – When you or your broker apply for a mortgage in principle (also called pre-approval), lenders often perform either a soft or hard credit check to assess your suitability.

2. Later in the Process – Before final approval, lenders may conduct a final hard check, which could happen just before exchange or on completion day. This ensures your financial situation hasn’t changed.

What Are Lenders Looking For?

In the early stages, lenders will primarily look for any bad credit history, such as missed payments, defaults, or arrears. They may also check whether you have a credit history at all, as this can sometimes be a barrier if you’ve been living abroad or have never borrowed money.

Later in the process, lenders will double-check your credit and also verify your income, expenses, and dependents to ensure everything matches your initial application.

Lenders typically focus on the last six years of your financial history, reviewing factors such as:

• Missed loan payments

• Loan rejections

• CCJs (County Court Judgments)

• Bankruptcy or IVA (Individual Voluntary Arrangements)

• Repossessions

• High credit utilisation (using over 50% of your available credit)

• Overdraft usage (as long as it’s responsible)

Download Your Credit Report

Before applying for a mortgage, it’s a good idea to download your credit report. This allows you to spot any errors, understand your credit standing, and address any issues that could affect your mortgage application.

If you’re unsure how to approach obtaining a mortgage based on your credit history, Mortgage One can advise and help you find a mortgage for your specific credit history.

How a Mortgage Broker Can Help Optimise Your Credit Rating

If your credit score isn’t quite where it needs to be, a broker can help guide you on how to improve it before applying. Simple steps, like registering on the electoral roll or correcting errors in your report, can make a big difference. Contact Mortgage One, and we’ll arrange for a broker to assess your situation and advise on how to boost your chances of success.

How a Mortgage Check Affects Your Credit Rating

Too many hard credit checks in a short period can lower your credit score. Lenders may interpret multiple checks as a sign of financial distress or over-reliance on borrowing. That’s why it’s important to avoid applying to too many lenders at once, which is where a mortgage broker can help.

Lenders don’t see soft credit checks, so these won’t impact your rating. Hard checks, however, leave a record on your report and usually stay there for 12 months. Applying for several mortgages within that time can make lenders more cautious.

Do Mortgage Brokers Perform Credit Checks?

Mortgage One may ask for a copy of your credit report or may request your permission to order one. We may need this to assess your financial history and give tailored advice. A broker’s expertise is especially useful in identifying the right lenders for you, reducing the need for multiple credit applications and protecting your credit rating.

By working with Mortgage One, you’ll ensure you only approach lenders likely to approve your mortgage, which limits the number of hard checks on your report.