Decision in principle rejected...now what?

hyperpringle

We've found a house we want, have all funds in place (deposit, stamp duty, good salaries etc), but the small issue of securing a mortgage seems to be a big old snag.

- Applied for Decision in Principle with Virgin today and got rejected due to 'low credit score'
- Checked Experian and i have 999, the girlfriend 998. I know these don't directly translate into the algorithms mortgage providers use, but gives good background that we should be ok
- I think the reason for decline is probably a limited credit history...have never needed credit, but i have credit card sporadically used for 3 years, the girlfriend credit card for 5 months

Is there anyway we can find out for sure why they view us as low credit?
Would applying through our banks mean we are viewed more favourably?
What should we do to build credit, and how quickly is this likely to take effect?

Thanks,
Jon

Smedders11

hyperpringle wrote: »

We've found a house we want,
Is there anyway we can find out for sure why they view us as low credit?
Would applying through our banks mean we are viewed more favourably?
What should we do to build credit, and how quickly is this likely to take effect?

Thanks,
Jon

You can ask the lender what reference agency they use. You can also ask them for a detailed reason why you were declined, but they don't need to give a detailed reason. Have you checked the other two CRAs? Something may be on one of them that is incorrect or affecting your application.

Applying through your bank could, but if you get declined again it'll impact your ability to get a mortgage further still. Check the other two CRAs first. It might also be worth talking to a good broker.

Using and paying off a credit card should help, but it's a slow progress. Could take up to a year for it to improve your credit appeal.

amnblog

Low score does not equal bad history.

I suspect this is a higher loan to value case?

Are you using a broker who can manage this for you?

hyperpringle

Smedders11 wrote: »

You can ask the lender what reference agency they use. You can also ask them for a detailed reason why you were declined, but they don't need to give a detailed reason. Have you checked the other two CRAs? Something may be on one of them that is incorrect or affecting your application.

Applying through your bank could, but if you get declined again it'll impact your ability to get a mortgage further still. Check the other two CRAs first. It might also be worth talking to a good broker.

Using and paying off a credit card should help, but it's a slow progress. Could take up to a year for it to improve your credit appeal.

Does carrying out checks with other CRAs leave any detrimental footprint on credit?

hyperpringle

amnblog wrote: »

Low score does not equal bad history.

I suspect this is a higher loan to value case?

Are you using a broker who can manage this for you?

Thanks amnblog. We are, but i'm not convinced by his ability to do anything about this.

He's recommended we go via a provider which doesn't use credit scoring, rather than try to push this application through. As first time buyer (and you're correct, high LTV = 90%), this is all very new and stressful for us. All thoughts are therefore much appreciated.

amnblog

This most likely isn't about the number of checks, it's needs managing by a professional as there are a number possible causes of the problem.

For example Virgin use both Experian and Equifax for scoring, so your Experian report is not the end of the story.

Smedders11

hyperpringle wrote: »

Does carrying out checks with other CRAs leave any detrimental footprint on credit?

Not at all. You can contact each CRA and request a statutory report for £2 each. But both of the other two, Callcredit and Equifax, have free services:

Equifax has ClearScore

Callcredit has Noddle

Even if it is a result of other factors it's prudent to check your files regularly, especially prior to a mortgage application.

hyperpringle

amnblog wrote: »

This most likely isn't about the number of checks, it's needs managing by a professional as there are a number possible causes of the problem.

For example Virgin use both Experian and Equifax for scoring, so your Experian report is not the end of the story.

So Equifax gives:
- me: 472 (soaring high, apparently), with 10 positives and 0 negatives
- girlfriend: 445 (looking bright), with 7 positives and 1 negative being "Your oldest active credit agreement is not very old"

Experian gave: 999 and 998 with no positives for both.

It likely to be the lack of active credit that's the issue?
- If so, any way we can get around this, other than giving it time?
- When does 'not very old' become no longer a negative?

Thrugelmir

hyperpringle wrote: »

So Equifax gives:
- me: 472 (soaring high, apparently), with 10 positives and 0 negatives
- girlfriend: 445 (looking bright), with 7 positives and 1 negative being "Your oldest active credit agreement is not very old"

Experian gave: 999 and 998 with no positives for both.

It likely to be the lack of active credit that's the issue?
- If so, any way we can get around this, other than giving it time?
- When does 'not very old' become no longer a negative?

Means diddly squat. For one simple reason CRA's do not lend money. Banks do. They'll set their own individual lending criteria for the product on offer. Income, employment, credit history, address history (electoral role) will all be scored against their criteria. If you don't jump the hurdles them they'll decline.

hyperpringle

Thrugelmir wrote: »

Means diddly squat. For one simple reason CRA's do not lend money. Banks do. They'll set their own individual lending criteria for the product on offer. Income, employment, credit history, address history (electoral role) will all be scored against their criteria. If you don't jump the hurdles them they'll decline.

Appreciate this point. I work in insurance and see the similarities with estimating risk and exposure, with each different insurer/mortgage provider having their own view and not wanting to share it. I completely get why they do it, though in this instance it leaves me very much in the dark. I can't see a clear reason for rejection, so don't know if there are general themes that anyone can share?

The only insight we've been given on our rejection is 'low credit'. I'm trying to identify my options from here and how to improve my chances in future. I don't know if Virgin are just being strict and we fall foul of their underwriting criteria, or whether there are other providers who might provide mortgage, without us needing to pay (in my opinion, granted) over the odds with a smaller provider. Any more help would be much appreciated.

Debtslayer

You need to use a good Independant mortgage broker who will know which lenders are more willing to accept you instead of keep wondering why you've been rejected .
There's nothing being gained by pondering on this, a good broker will save you a lot of time and stress trying to decipher who you should try and apply with next.