Getting a mortgage means letting lenders look at your credit report.
Many people worry about what these lenders might find, and whether past money troubles could stop them buying a home. You’ll want to know exactly what catches a lender’s eye when they check your file.
Mortgage lenders look at credit reports differently from other lenders. They’re interested in your long-term reliability rather than just your current position.
A few small problems here and there won’t necessarily rule you out, but there are certain things that make lenders more likely to say yes.
Let’s look at what makes the perfect credit report for a mortgage, and what you can do if yours isn’t quite there yet.
Understanding Credit Reports From a Lender’s View
Mortgage lenders use credit reports from three main UK agencies – Experian, Equifax and TransUnion.
Each one holds slightly different information, and lenders often check more than one. They’re looking for patterns in how you handle money and signs that you’ll keep up with mortgage payments.
Your credit report shows your financial behaviour over the last six years.
It includes details of your bank accounts, credit cards, loans, and whether you’ve paid them on time. It also shows if you’re registered to vote, any county court judgements (CCJs), and your connections to other people’s finances.
Lenders care most about recent credit history.
Something that happened five years ago matters less to them than what happened last month. They’re also more interested in how you handle big regular payments than small occasional ones.
Read more: What is a Credit Reference Agency?
What Makes The Perfect Credit Report?
The best possible credit report for a mortgage would show:
- A long history of paying everything on time. This means no missed payments on any credit cards, loans or bills for at least the last year – preferably longer.
- Regular stable income going into your bank account each month, with no bounced payments or going overdrawn.
- Being registered to vote at your current address. This proves who you are and where you live.
- A mix of credit accounts that you’ve managed well. Having both credit cards and loans shows you can handle different types of borrowing.
- Low credit card balances compared to your credit limits. Using less than 30% of your available credit looks good to lenders.
- No connection to other people’s poor credit through joint accounts or addresses.
- Definitely no payday loans showing.
When Things Aren’t Perfect
Most people’s credit reports have a few marks.
Here’s how different issues affect your chances:
- Late payments show up for six years but matter most in the last 12 months. One or two from over three years ago might not cause problems if everything else looks good.
- CCJs stay on your report for six years from the date they’re settled. Most lenders want them cleared for at least a year before offering a mortgage.
- Being turned down for credit recently can make lenders nervous. It’s better to wait a few months before applying for a mortgage.
- High credit card balances worry lenders, even if you’ve never missed a payment. They suggest you might struggle with more debt.
Making Your Credit Report Better
Start improving your credit report at least six months before applying for a mortgage.
Small changes can make a big difference:
- Set up direct debits for all your regular bills. This prevents missed payments and shows lenders you’re organised.
- Keep your credit card balances low. Pay more than the minimum each month.
- Don’t apply for new credit in the 3-6 months before a mortgage application. Each application leaves a mark that other lenders can see.
- Check your report for mistakes. Wrong addresses or accounts that aren’t yours can cause problems.
- Stay in your current job and address if possible. Lenders like stability.
Read more: Will Checking My Credit Report Affect My Credit Score?
Special Cases
First-time buyers
First-time buyers often worry about not having much credit history. Lenders understand this but want to see some evidence you can handle credit. A credit card used carefully for a year can help.
Read more: Improve your chances of first-time buyer mortgage success
Self-employed
Self-employed people need an extra-strong credit report because their income might vary. Clean credit for two years or more helps balance this risk.
Read more: Can I get a mortgage if I’m self-employed?
Buy-to-let investors
Buy-to-let investors face strict checks too. Lenders look closely at how you’ve handled any existing mortgages.
Read more: Buy to Let Mortgages
How Mortgage Brokers Help
A mortgage broker knows which lenders are most likely to accept different credit situations. They understand that different lenders have different rules about credit history.
Brokers can often find options even if your credit isn’t perfect. They know which lenders focus more on recent behaviour than old problems, and which ones consider the reasons behind credit issues.
They’ll also help you prepare your application to explain any marks on your credit report. This matters because the story behind credit problems can make a difference to lenders.
Looking for a mortgage with credit issues?
Speaking to a broker really early helps. They can tell you what needs fixing before you apply and which lenders might help right now.
Want to check how your credit report looks to lenders?
Get in touch and we’ll put you in contact with an experienced mortgage broker who can review your situation and explain your options.
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Frequently Asked Questions
Late payments stay on your UK credit report for 6 years. However, their impact reduces over time, with recent late payments causing more concern for lenders.
No. Checking your own credit report creates a ‘soft search‘ that doesn’t affect your credit score or appear to lenders.
Read more: Will Checking My Credit Report Affect My Credit Score?
Most mainstream lenders want to see a CCJ settled for at least 12 months. Some specialist lenders might consider applications sooner.
Related: Do I have a CCJ? How do I find out?
No. Different lenders use different agencies. Some check all three, while others might only use one or two.
Read more: Which Credit Report Do Mortgage Lenders Use?
Yes, but it’s harder. Lenders need to see some evidence you can manage credit. Even a year of using a credit card responsibly can help.
Yes, if you’re applying jointly. Lenders check both credit reports and consider the weaker score in their decision.
Read more: How do joint mortgages work?
There’s no universal minimum score. Each lender has different criteria, and your credit score is just one factor they consider.
Read more: What credit score is needed for a mortgage?
Yes, significantly. Most lenders view payday loans negatively, even if repaid on time. Wait at least 12 months after repaying before applying.
Job changes don’t directly affect your credit report, but lenders like to see employment stability when applying for a mortgage.
Your credit utilisation ratio is a measure of how much of your available credit you’re actually using.
Say you have a credit card with a £5,000 limit and your current balance is £2,000. Your utilisation ratio would be 40%
Read more: What is Your Credit Utilisation Ratio?
Only if your landlord reports to a credit reference agency. Some rent reporting schemes exist but aren’t widely used.
Start at least 6 months before applying, ideally 12 months. This gives time for improvements to show on your report.
Read more: How to get mortgage ready
Yes, significantly. Being registered to vote at your current address helps verify your identity and can improve your credit score.
Read more: Am I on the Electoral Register?
