Credit & Mortgage FAQs
Common Questions About Credit History and Getting a Mortgage
Your credit history can be an important part of a mortgage application, but it is not as simple as having a "good" or "bad" credit score.
Mortgage lenders have their own lending criteria and credit assessment processes. A missed payment, default or County Court Judgment does not necessarily mean that obtaining a mortgage is impossible, just as a high credit score does not guarantee that a mortgage application will be approved.
What happened, how long ago it happened, the amount involved, whether the debt has been repaid and how your finances have been managed since can all be relevant.
At Cambs Ely Mortgages, we believe the first step is understanding what is actually showing on your credit history rather than making assumptions about what a lender may or may not accept.
Below are answers to some of the most common questions we receive about credit and mortgages.
Understanding Credit & Mortgages
Why do mortgage lenders check my credit history?
A mortgage is a significant long-term financial commitment.
Lenders use credit information as part of their assessment of how you have managed borrowing and financial commitments in the past.
Your credit history is only one part of the application. Income, affordability, deposit, existing commitments, property and lender criteria are also important.
Is there a minimum credit score needed for a mortgage?
There isn't one universal credit score that guarantees mortgage approval.
Different lenders use different credit assessment systems and lending criteria.
The score you see through a consumer credit-reporting service isn't necessarily the same score or assessment used by a mortgage lender.
Does a high credit score guarantee that I'll get a mortgage?
No.
A strong credit profile can be helpful, but lenders also need to assess affordability, income, existing commitments, deposit and the property.
You can therefore have a strong consumer credit score and still not meet a particular lender's mortgage criteria.
Does a low credit score mean I cannot get a mortgage?
Not necessarily.
The reasons behind the score can be more important than the number itself.
A lender may look at the information contained within your credit history alongside the rest of your circumstances.
Checking Your Credit Report
Should I check my credit report before applying for a mortgage?
It can be very useful.
Reviewing your credit report before applying gives you an opportunity to understand what lenders may see and identify information that may need further investigation.
It can also help uncover old accounts, missed payments, defaults or address information you may have forgotten about.
Will checking my own credit report damage my credit score?
Checking your own credit report through a credit reference service is generally treated differently from a lender carrying out a hard credit search.
Reviewing your own information can therefore be a useful part of preparing for a mortgage.
What should I look for on my credit report?
Check that your personal information and address history are correct.
You should also review active and closed credit accounts, payment history, outstanding balances, defaults, County Court Judgments and any other information recorded against you.
If something looks unfamiliar or incorrect, investigate it rather than ignoring it.
What if information on my credit report is wrong?
If you believe information is inaccurate, you can raise the issue with the relevant credit reference agency and, where appropriate, the organisation that supplied the information.
It can be sensible to address genuine errors before submitting a mortgage application where possible.
Missed & Late Payments
Can I get a mortgage after a missed payment?
Potentially.
A missed payment doesn't automatically prevent you from obtaining a mortgage.
The lender may consider what type of account was affected, how many payments were missed, how recently it happened and how your accounts have been managed since.
Does it matter what type of payment I missed?
It can.
Lenders may view different types of credit commitments differently.
For example, the significance of a missed mortgage payment may not necessarily be assessed in the same way as a late payment on another type of account.
Criteria vary considerably between lenders.
How long do I need to wait after a missed payment before applying?
There isn't one waiting period that applies to every lender.
Some lenders may accept certain historic payment problems while others may require a longer period of satisfactory credit conduct.
The details of the missed payment and your wider circumstances are important.
What if I only missed one payment by accident?
The context can matter, but the lender will ultimately apply its own criteria to the information recorded.
An isolated historic late payment may be treated differently from repeated or recent payment problems.
Defaults
What is a default?
A default can be recorded when a credit agreement has fallen significantly behind and the lender considers the agreement to have broken down.
The default can then appear on your credit history.
Can I get a mortgage with a default?
Potentially.
Having a default doesn't automatically mean a mortgage is impossible.
The lender may consider the amount, date, type of credit involved, whether it has been satisfied and your subsequent credit conduct.
Does the size of the default matter?
It can.
Some lenders have criteria relating to the amount of a default as well as when it occurred.
A small historic default may therefore be treated differently from a large or recent one.
Does paying off a default improve my mortgage options?
Settling a default can be relevant because the credit record can show that the debt has subsequently been satisfied.
However, settling it doesn't remove the historic default immediately from your credit history.
Different lenders have different criteria regarding satisfied and unsatisfied defaults.
Can I get a mortgage with an unsatisfied default?
Potentially, depending on the lender and circumstances.
Some lenders may require particular debts to be satisfied, while others may have different criteria.
The amount, age and type of default can all be relevant.
County Court Judgments
What is a CCJ?
A County Court Judgment, commonly known as a CCJ, can be issued when someone owes money and legal action results in a court judgment requiring payment.
A CCJ can affect your credit history and may be considered by mortgage lenders.
Can I get a mortgage with a CCJ?
Potentially.
A CCJ doesn't automatically prevent you from obtaining a mortgage.
The amount, date, status and circumstances can all influence which lenders may consider the application.
Does paying a CCJ mean it disappears?
Not necessarily.
Paying a CCJ may result in it being recorded as satisfied, subject to the relevant rules and circumstances, but the historical information can remain visible for a period.
Mortgage lenders can have different criteria regarding satisfied CCJs.
Does an old CCJ matter less than a recent one?
The age of a CCJ can be important.
Some lenders may be more comfortable with historic credit problems where satisfactory credit conduct has been demonstrated since.
However, lender criteria vary and the overall credit history still needs to be considered.
Debt Management Plans
Can I get a mortgage if I've been in a Debt Management Plan?
Potentially.
A Debt Management Plan, commonly known as a DMP, can affect the range of lenders available.
Whether a mortgage is possible will depend on factors including whether the plan is ongoing or completed, the debts involved, your payment history and your wider circumstances.
Do I need to finish my Debt Management Plan before applying?
Not necessarily in every case.
Some lenders may require the plan to have been completed for a period, while others may have criteria that allow certain ongoing arrangements.
The available options can be more restricted.
What if I've completed my Debt Management Plan?
Completing a DMP can be an important milestone, but lenders may still consider the underlying credit history and how recently the plan ended.
A period of stable financial conduct afterwards may be relevant to lender assessment.
Individual Voluntary Arrangements & Bankruptcy
Can I get a mortgage after an IVA?
Potentially.
An Individual Voluntary Arrangement can significantly affect mortgage options, particularly while it is active or shortly after completion.
Some lenders may consider applicants after an IVA has been completed for an appropriate period, subject to their criteria.
Can I get a mortgage after bankruptcy?
Potentially, once the relevant legal and lender requirements have been met.
Mortgage options following bankruptcy can be limited and lender criteria can be considerably more restrictive.
The length of time since discharge, your subsequent credit conduct, deposit and overall circumstances can all be important.
Will I need a larger deposit after serious credit problems?
Potentially.
Some mortgage options for applicants with more significant adverse credit may require a lower Loan to Value, which means providing a larger deposit or having more equity in the property.
This isn't a universal rule, and requirements vary between lenders.
Credit Cards
Does having a credit card affect my mortgage application?
Having a credit card doesn't automatically cause a problem.
Lenders may consider the outstanding balance, available credit, monthly commitments and how the account has been managed.
Should I pay off my credit card before applying for a mortgage?
Reducing debt may improve affordability in some circumstances, but whether paying off a particular balance is necessary depends on your overall position.
If your savings are also being used for a property deposit and buying costs, it can be useful to consider the whole financial picture before moving money around.
Does using most of my credit limit affect a mortgage?
High levels of credit utilisation can form part of the information available to lenders when they assess your overall financial position.
Regularly relying heavily on available credit may therefore be relevant.
Should I close unused credit cards before applying?
Not automatically.
Closing accounts can change your overall credit profile, and there isn't one rule that says all unused cards should be closed before a mortgage application.
Avoid making unnecessary changes purely because you assume they will improve your mortgage prospects.
Loans & Car Finance
Does a personal loan affect how much I can borrow?
It can.
The lender will normally consider the monthly loan commitment when calculating mortgage affordability.
The effect depends on the size of the payment, remaining loan term and the lender's affordability model.
Does car finance affect a mortgage?
It can.
Hire Purchase, Personal Contract Purchase and other vehicle finance arrangements can create monthly commitments that are considered within mortgage affordability.
A significant car payment can therefore reduce the amount available for mortgage repayments under some lenders' calculations.
Should I pay off my loan before applying?
Not automatically.
Repaying a loan can potentially improve affordability, but it also uses savings that might otherwise contribute towards your deposit or buying costs.
The most appropriate approach depends on the figures and your circumstances.
Can I take new car finance while my mortgage is being processed?
You should be cautious about taking significant new credit during a mortgage application.
New car finance changes your financial commitments and could affect affordability.
It is sensible to discuss significant new borrowing before proceeding with it.
Buy Now, Pay Later
Does Buy Now, Pay Later affect a mortgage application?
It can.
Buy Now, Pay Later arrangements are a form of financial commitment and may be relevant to a lender's assessment of your finances.
The impact depends on your usage, outstanding commitments and the lender's assessment.
Should I stop using Buy Now, Pay Later before applying for a mortgage?
Avoiding unnecessary new borrowing while preparing for a mortgage can help keep your financial circumstances stable.
Regular reliance on short-term credit can also be relevant when considering your overall financial position.
Will one Buy Now, Pay Later purchase stop me getting a mortgage?
Not necessarily.
Mortgage applications are assessed on the overall circumstances rather than one isolated factor.
However, multiple commitments or significant outstanding balances may have a greater impact.
Overdrafts
Does using an overdraft affect my mortgage?
It can.
Occasional use of an arranged overdraft may be viewed differently from persistent reliance on an overdraft.
Lenders may review bank statements and account conduct as part of the mortgage application.
Is being in my overdraft every month a problem?
Regular reliance on an overdraft can indicate that expenditure is consistently exceeding available income.
A lender may take this into account when assessing affordability and financial conduct.
Should I clear my overdraft before applying?
Reducing reliance on an overdraft can strengthen your overall financial position, but the appropriate action depends on your circumstances.
The objective should be sustainable financial management rather than temporarily moving money simply to make a statement look different.
Payday Loans & Short-Term Credit
Can payday loans affect a mortgage application?
Yes, they can.
Some lenders may view recent payday or short-term borrowing cautiously because it can suggest previous financial pressure.
The age, frequency and circumstances surrounding the borrowing can be relevant.
Does an old payday loan mean I cannot get a mortgage?
Not necessarily.
Historic short-term borrowing may be treated differently from recent or repeated usage.
Different lenders have different criteria, so the wider circumstances need to be considered.
Hard & Soft Credit Searches
What is a soft credit search?
A soft search allows certain information to be checked without leaving the same type of visible credit-search footprint as a hard search.
Soft searches can be used for various purposes, including some mortgage Agreements in Principle.
What is a hard credit search?
A hard search is a formal credit check associated with an application for credit.
It can normally be visible to other organisations reviewing your credit history.
Does an Agreement in Principle affect my credit score?
It depends on the lender.
Some lenders use a soft credit search at Agreement in Principle stage, while others may use a different process.
You should understand the type of search being carried out before proceeding.
Can too many mortgage applications affect my credit?
Multiple hard credit searches over a short period can form part of your credit history.
This is one reason it can be preferable to research lender criteria carefully rather than submitting repeated applications without understanding whether they are likely to fit your circumstances.
Address History & Electoral Register
Why does my address history matter?
Lenders and credit reference agencies use address information to help match you with your financial records.
Incorrect or inconsistent addresses can therefore create complications.
Does being on the electoral register help?
Being correctly registered where eligible can help credit reference agencies verify your identity and address.
However, electoral registration alone doesn't determine whether a mortgage will be approved.
What if I've moved house several times?
Moving frequently doesn't automatically prevent you from obtaining a mortgage.
However, you should provide a complete and accurate address history when requested.
No Credit History
Can I get a mortgage if I've never had credit?
Potentially.
Having little or no credit history isn't the same as having bad credit.
However, a limited credit record can mean there is less information available about how you manage borrowing.
Different lenders may approach this differently.
Should I take out credit just to improve my mortgage chances?
You shouldn't take unnecessary borrowing simply because you believe you need debt to obtain a mortgage.
If you're considering ways to prepare your credit profile, focus on responsible financial management rather than creating commitments you don't need.
Credit Problems Caused by Life Events
What if my credit problems happened because of redundancy, illness or another difficult period?
The circumstances behind previous credit problems can be relevant, particularly with lenders that consider applications in more detail.
However, the lender will still need to apply its own credit and affordability criteria.
The important thing is to explain the circumstances accurately rather than hiding the issue.
Should I explain why I missed payments?
Yes, where relevant.
Understanding what happened, when it happened and whether the underlying problem has now been resolved can help your mortgage adviser assess which lender criteria may be appropriate.
Is it better to disclose credit problems before applying?
Yes.
If you're aware of previous credit problems, tell your mortgage adviser before an application is submitted.
Trying to hide adverse credit is unlikely to help because lenders can obtain information through their credit assessment.
Knowing about the issue in advance allows it to be considered when researching suitable lenders.
Improving Your Position Before Applying
How can I improve my credit position before a mortgage application?
Start by understanding your current credit report.
Make sure your address information is accurate, maintain payments on time and avoid unnecessary new borrowing.
Reducing outstanding debts may help in some circumstances, particularly where existing monthly commitments are affecting affordability.
Most importantly, allow time for genuine financial stability rather than looking for a quick way to manipulate a credit score.
How quickly can I improve my credit score?
There isn't a guaranteed timeframe.
Credit histories develop over time, and different lenders assess information differently.
The objective shouldn't simply be to increase a consumer score by a particular number. It should be to demonstrate stable and responsible financial conduct.
Should I apply for several mortgages to see who accepts me?
Generally, submitting multiple applications without first understanding lender criteria can be counterproductive.
Each lender has different criteria, so researching an appropriate lender before making a full application can reduce unnecessary applications and credit searches.
Deposits & Adverse Credit
Can a larger deposit help if I've had credit problems?
Potentially.
A larger deposit reduces the Loan to Value, which can sometimes increase the range of mortgage options available.
However, a larger deposit doesn't automatically override lender criteria relating to adverse credit.
How much deposit will I need if I have adverse credit?
There isn't one figure that applies to everyone.
The required deposit can depend on the type and age of the credit issue, the lender, property and wider application.
More significant or recent adverse credit may restrict the Loan to Value available.
Should I wait and save a larger deposit?
Sometimes waiting can improve both the deposit position and the age of previous credit issues.
However, whether waiting is beneficial depends on your circumstances.
It can be useful to understand what may be possible now before deciding whether delaying an application would improve your options.
Remortgaging With Credit Problems
Can I remortgage if my credit has worsened since I bought my home?
Potentially.
Your options may be different from when the original mortgage was arranged, but worsening credit doesn't automatically make remortgaging impossible.
The nature of the credit problems and your current affordability will be important.
Should I stay with my existing lender if my credit has worsened?
Your existing lender may offer product transfer options, potentially through a different process from a new mortgage application.
However, the options available depend on your lender and what you're trying to achieve.
It can be useful to understand both the existing lender's options and whether alternatives are available elsewhere.
Using a Mortgage Adviser With Credit Problems
Why can mortgage advice be useful if I've had adverse credit?
Lenders have very different attitudes towards previous credit problems.
One lender may decline an application because of a particular credit event while another may have criteria that allow it to be considered.
Understanding those differences before submitting an application can be particularly important where the credit history isn't straightforward.
Should I be embarrassed about discussing my credit history?
No.
Credit problems can happen for many reasons.
From a mortgage perspective, the important information is what happened, when it happened, the amounts involved, the current position and how it fits with lender criteria.
Providing accurate information makes it easier to assess your options.
How many lenders does Cambs Ely Mortgages have access to?
Cambs Ely Mortgages has access to more than 200 lenders, including high-street banks, building societies and specialist lenders.
This can be particularly useful where circumstances don't fit the criteria of a single high-street lender.
Does Cambs Ely Mortgages charge for the initial conversation?
There is no charge for the initial conversation.
This gives us an opportunity to understand your circumstances and discuss what you're trying to achieve before you decide whether to proceed.
What does Cambs Ely Mortgages charge for arranging a mortgage?
A fee may be payable for arranging your mortgage.
Your adviser will confirm the amount before you choose to proceed.
Our mortgage arrangement fee is usually between £295 and £995, with the precise amount depending on your circumstances and the complexity of the work involved.
Have More Questions About Credit & Mortgages?
Credit history is only one part of a mortgage application.
Rather than concentrating solely on a credit score, it is important to understand the information behind it, how recent any problems are and how different lenders may assess your circumstances.
Our Credit & Mortgages Guide provides a more detailed explanation of credit scores, missed payments, defaults, CCJs and how credit history can interact with mortgage applications.
Our Mortgage & Home Buying Guides and Educational Videos also provide further information about affordability, deposits, mortgage applications and preparing to buy or remortgage.
Thinking About a Mortgage With Previous Credit Problems?
Don't assume that a missed payment, default, CCJ or other historic credit problem automatically means you cannot obtain a mortgage.
Equally, it is important not to make repeated applications without first understanding how lenders may view your circumstances.
The starting point is understanding your credit history and then considering it alongside your income, deposit, affordability and property plans.
Cambs Ely Mortgages is based in Cambridgeshire and helps clients in Ely, Cambridge, Cambridgeshire, East Anglia and throughout England through convenient remote appointments.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
Information on this page is for general guidance and does not constitute personalised mortgage, credit, debt, tax, legal or financial advice. Mortgage availability and eligibility depend on individual circumstances and lender criteria. If you are experiencing financial difficulty or need advice about managing debts, you should consider obtaining appropriate specialist debt advice.