Credit score dropped from excellent to fair due to credit applications

sugarbabe84

At the start of the year, my credit score was excellent at 998.

However, in May I took out an American Express Credit Card, which I pay off in full every month.

In July I decided to make a bold switch and open a new bank account with Halifax, as I wasn't happy with the service HSBC were providing.

What it's meant is that my credit score has dropped to fair, at 878.

I'm in the process of a mortgage application and I just went through a thorough application for an AIP with Leeds Building Society. They have now forwarded my information to underwriters.

I was surprised at how very detailed their AIP process is, as I've previously managed to get instant passed AIPs online with Barclays. It was an annoyingly long call, but I was impressed, as I think it's good to really go into the detail and set the right expectations from the outset.

The call went okay, but now after checking my credit score, which I hadn't checked since April, I am a little bit concerned. I didn't realise they would have such an impact.

Could my record of this new credit card and new bank account have a negative impact? How detailed are underwriters at looking at this sort of thing?

[Deleted User]

Fear not. Your credit score is fictional and not seen by anyone.

Applying for credit while you're applying for a mortgage is a bad idea, but you appear to have applied some time ago. It shouldn't be an issue.

Don't make any more applications until your mortgage is complete.

sugarbabe84

Deleted_User wrote: »

Fear not. Your credit score is fictional and not seen by anyone.

Applying for credit while you're applying for a mortgage is a bad idea, but you appear to have applied some time ago. It shouldn't be an issue.

Don't make any more applications until your mortgage is complete.

Thank you.

So what exactly do they see when one makes these applications?

ACG

As above your credit score is worthless.
When a lender does an AIP, they take the information (ie commitments, balances, payment history - but NOT the score), they combine with information on the application but not on your credit report (ie incomes, number of kids etc) and then give you their own score.

Presumably if it has gone to the underwriter, it has passed the initial credit score?

As above, do not make any more applications as it can affect the scoring of your applications until your Mortgage is through.

Thrugelmir

On a rudimentary level. Finance companies know nothing about you. Therefore any change in circumstances will be scored negatively, with credit files being updated in arrears. Over time your score will normalise again.

The credit data available plus other data such as employment history, electoral roll registration, nature of job etc enables lenders to profile you fairly accurately. By profile I mean group you into a certain type of borrower and the risk you pose.

sugarbabe84

ACG wrote: »

As above your credit score is worthless.
When a lender does an AIP, they take the information (ie commitments, balances, payment history - but NOT the score), they combine with information on the application but not on your credit report (ie incomes, number of kids etc) and then give you their own score.

Presumably if it has gone to the underwriter, it has passed the initial credit score?

As above, do not make any more applications as it can affect the scoring of your applications until your Mortgage is through.

Presumably if it has gone to the underwriter, it has passed the initial credit score?

Oh, interesting. Yes, I guess it must have passed for it to be going to the underwriter.

sugarbabe84

Thrugelmir wrote: »

On a rudimentary level. Finance companies know nothing about you. Therefore any change in circumstances will be scored negatively, with credit files being updated in arrears. Over time your score will normalise again.

The credit data available plus other data such as employment history, electoral roll registration, nature of job etc enables lenders to profile you fairly accurately. By profile I mean group you into a certain type of borrower and the risk you pose.

Thanks. This is very informative.