How Credit Checks Work: Mastering Mortgage Approval

Credit Mysteries: Your Guide to Mortgage Applications

Understanding the intricacies of credit is crucial, especially when you’re on the journey to securing a mortgage. In this blog post, we’ll unravel the mysteries surrounding credit, credit checks, and their impact on your mortgage application. As experienced mortgage brokers, our goal is to provide valuable insights and answer your questions to guide you through the mortgage application process.

What is Credit?

Credit is a multifaceted term in the financial realm, often denoting a contractual agreement where a borrower receives funds and commits to repayment, usually with interest. When applying for a mortgage, your creditworthiness, or credit history, is scrutinised by lenders to assess your financial reliability.

What is a Credit Report?

It is a comprehensive document reflecting your credit score and history,  illustrating your financial background. It discloses details such as your punctuality in bill payments, the extent of your debt, the frequency of credit applications, any instances of missed payments, and the presence of county court judgments (CCJs) on your record.

Understanding Adverse Credit:

Adverse credit refers to a history of poor repayment on loans or credit cards, leaving a lasting mark on your credit report.

What is a Mortgage Credit Check?

A mortgage credit check involves a thorough examination of your credit report, encompassing personal and financial details. This process enables lenders to evaluate your borrowing and repayment history, determining whether you qualify for a mortgage. Different lenders have distinct criteria for evaluating credit reports, so past credit issues may not necessarily disqualify you.

Soft Credit Checks and Your Credit Score:

Soft credit checks, although recorded, are invisible to other lenders and don’t impact your credit score. These checks are commonly conducted by comparison sites and certain financial institutions to present you with relevant offers.

Hard Credit Checks and Your Credit Score:

Unlike soft checks, hard credit checks leave a visible footprint on your credit report, impacting your credit score. Lenders typically conduct hard checks with your explicit permission, revealing detailed personal information and any negative marks on your credit history.

When Do Mortgage Lenders Perform Credit Checks?

Lenders usually conduct credit checks early in the mortgage application process, both for mortgage in principle and final approvals. There are three credit reference agencies—Equifax, Experian, and TransUnion—each maintain information about you, which lenders utilise in their assessments.  They assess various aspects, including bad credit indicators, income, expenses, age, and dependents, to ensure your financial situation aligns with their criteria.

What Are Lenders Looking For?

In the initial stages of the process, lenders meticulously scrutinise your credit report, seeking evidence of unfavourable credit elements like arrears, missed payments, and debt management plans; although some lenders may lean towards applicants with an established credit history, exceptions are made, particularly for individuals who have resided abroad.

As the assessment progresses, lenders conduct more comprehensive evaluations of your credit history, debts, income, expenditure, age, and dependents. The objective of a credit check is to verify the ongoing stability of your financial situation since your initial mortgage application. Should an individuals circumstances change throughout the mortgage application process, such as increased borrowing or modifications to the applicants, additional checks are likely to be conducted by the chosen lender.

Factors Considered by Lenders During Credit Checks:

Not every past credit issue automatically disqualifies you from securing a mortgage. Lenders typically focus on the last six years, checking for:

  • Missed loan payments
  • Credit/loan rejections
  • Utility or phone contract issues
  • IVAs (Individual Voluntary Arrangements)
  • CCJs (County Court Judgments)
  • Repossessions
  • Bankruptcy
  • High credit utilisation ratio (over 50%)
  • Your credit score/credit history
  • Overdraft usage (acceptable if responsible and within means)

How a Mortgage Broker Can Optimise Your Credit Report:

If your credit score needs improvement, our experienced mortgage brokers can provide guidance to enhance your chances of mortgage approval. From identifying areas for improvement to liaising with creditors, we offer tailored solutions for a successful application.

If you would like to talk to one of our brokers about your credit score – get in touch.

Impact of Mortgage Checks on Your Credit Rating:

Excessive hard credit checks in a short period may negatively affect your credit rating, potentially limiting your mortgage options. It’s essential to be mindful of the type and frequency of credit checks, as soft checks have minimal impact.  Waiting a few months after a declined application is advisable, ensuring a more strategic and responsible approach to borrowing.

Successful Mortgage Application and Credit Impact:

Upon securing a mortgage, expect a slight dip in your credit score. This decrease is temporary, and your score should gradually recover, provided you meet your repayment commitments. Avoid applying for additional financing immediately after getting a mortgage to allow your credit score time to bounce back.


Navigating the intricacies of credit checks and mortgages is vital for a successful home-buying journey. As your dedicated mortgage broker, we are here to guide you through each step, offering expertise to optimise your credit report and secure the mortgage you deserve. If you have any questions or need personalised assistance, don’t hesitate to reach out to us – your trusted partner in the world of mortgages.