When you apply for a mortgage with a lender, they’ll run a credit check on you. That means looking at your financial history to determine how responsible you’ve been in the past when borrowing money and to establish how risky – or not – it would be to offer you a mortgage.
If the provider finds too many red flags in your credit history, they may reject your application. Different providers have different ways of evaluating the findings from a credit report. So, having issues with bad credit in the past won’t automatically stop you from being accepted for a mortgage but it depends on the provider’s eligibility criteria.
There are two types of credit check: hard and soft. It’s essential to know the difference and how the checks themselves can affect your credit rating in the future.
Soft Credit Check: This type of check is performed to see if you may be a suitable candidate for a loan without running a full search. A soft search is not visible on your report to other companies, only to you. As a result, they do not affect your credit rating.
Hard Credit Check: This type of check is when a provider will look back at your entire financial history to see every time you’ve applied for credit, and any issues with repayments. This type of check leaves what is known as a footprint on your credit report and therefore can be seen by future credit lenders – be it for a mortgage, credit card or another type of loan.
CheckMyFile produces a detailed credit report that checks data from Equifax, Experian and TransUnion. If you want to find out what your credit score is or want to improve your score.
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