Mortgage Credit Question

Cobbles_Duck

Hi Folks,

Long time lurker and admirer for the help and advice this board gives to people.

The reason for posting is I recently applied to my bank for a mortgage and got an AIP after initial credit check etc. This gave me optimism about getting on to the ladder, despite the fact I don't have the perfect credit score at this point. Unfortunately my bank wouldn't arrange a full mortgage interview (or allow me to ask specific questions of a mortgage advisor) until I had made a move for a property and so I now have a refundable holding deposit down on a Shared Ownership property.

I met with the bank today but sadly have not been accepted for a mortgage due to a failed credit check.

I'm an Experian account holder and so I know that I only have a mid-range 'Fair' rating for my score. More of a possible issue was historic default which I fully settled this year. Other than that it's pretty clean reading.

In terms of what I was hoping to achieve, I've got 15% of the share stored away and could likely raise beyond this to cover any fees, but likely would struggle to reach 80% LTV / 20% deposit with any more on top.

I presume I'm in a nightmare area of the venn diagram between Shared Ownership and Bad Credit but I just wondered if this is unlikely to work out for me or if anyone can recommend mortgage products that might help me to proceed?

I've made enquiries with a couple of brokers which I'm waiting to hear back on but would love advice from anyone on this.

Thanks in advance!

[Deleted User]

You need to see all three versions of your credit file as lenders use some and not others. Get your Experian, Equifax and Call Credit (Noddle) reports and see if there are any irregularities. Ignore the score, the only person who can see that is you, just worry about the information in the reports. When did the default get recorded and how much was it for? Was it settled in full or were you on a payment agreement for it?

Cobbles_Duck

Thanks habssac! I've signed up to the others now and they seem consistent in terms of the facts. It has, however, draw attention to the fact that my flatmates never added me to the electoral register which I've just now corrected online. The default was recorded in May last year for £1.1k (a former student overdraft I didn't realise was being charged fees) - I paid the whole amount off in monthly instalments ending two months ago

[Deleted User]

Was the student overdraft with the bank you applied for the mortgage with?

Cobbles_Duck

Now that you mention it, technically yes - Lloyds was the overdraft, Halifax the mortgage application

[Deleted User]

That might be why in that case? I'm still trying to track down their lending criteria (as you know!) but that probably didn't help.

Thrugelmir

Cobbles_Duck wrote: »

I paid the whole amount off in monthly instalments ending two months ago

Why so long to do so? I say that. As it's a reflection of you as a borrower that the lender is viewing. Profiling is an important part of the vetting process. Your credit history provides part of this data which can categorise you as a potential borrower surprisingly accurately. As people do fall into distinct camps.

Cobbles_Duck

Hi Thrugelmir - truth be told I didn't have much disposable income when I made the agreement (my old job was paid significantly less well than current, plus London rent was hitting my bank at the time). Also largely because I wasn't aware that slower repayment would adversely affect me - they just asked me how long I would like to repay it over and agreed when I suggested the time frame.