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Mortgage credit check

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 8, 2023

Mortgage credit check

Mortgage credit checks are standard when applying for a mortgage. They are how lenders establish your ability to pay your mortgage and involve checking your credit history, either at a top level or in detail to assess your level of risk. The type of credit check conducted can affect your credit rating and deter potential lenders.

Below is a detailed look at mortgage credit checks, how they work, and how to pass them to qualify for a mortgage.

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What Is a Mortgage Credit Check?

A credit check is also called a credit pull, credit search, or credit inquiry. It is when a potential lender checks your financial and lending history with a credit reference agency to determine your creditworthiness. The lender checks how responsible you have been with loans in the past to determine how risky it would be to lend you money.

If your credit history indicates too many red flags, lenders consider you high risk and may reject your application.

Types of Mortgage Credit Checks

There are two main types of mortgage credit checks – soft credit checks and hard credit checks.

Soft credit checks are a basic assessment of your creditworthiness, while hard checks are a detailed analysis of your credit history. A soft check gives basic information about your credit record, such as your name, date of birth, current address and address history, and an overview of your financial history. It is often conducted in the pre-approval stage to enable a lender to give you a quote for your application.

A hard credit check is performed further into the application process and involves a detailed review of your credit file.

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When Do Mortgage Lenders Conduct Credit Checks?

Typically, mortgage companies run credit checks early in the loan application process. It is part of their pre-approval process to establish whether you are high or low risk.

However, the credit agency can run a credit check on you at any time, including just before the exchange, on the exchange day, after the exchange, or on closing day. Some conduct a soft mortgage check in the early stages of your application and a hard check towards closing. That said, some lenders, such as banks, can run a hard check before an initial agreement in principle applications.

If there is a change in your application terms at any point, the lender will most likely recheck your credit. For instance, if you adjust the initial application to borrow more or add or remove a person from the application.

What Does a Mortgage Credit Check Entail?

The exact assessment criteria for creditworthiness vary from lender to lender. However, most lenders will look at the following parameters during a mortgage credit check to confirm your identity and credit status:

  • Name and date of birth
  • Address history
  • Credit score
  • Current loans and credit, including overdrafts, other mortgages, car finance, and credit cards
  • Amount owed to other lenders
  • Recent credit activity
  • Borrowing history
  • If you have any missed loan payments
  • If you pay utility bills on time
  • Loan rejections
  • If you have filed for bankruptcy
  • Recent incidents of foreclosure
  • County court judgements (CCJs)
  • Individual voluntary agreements (IVAs)
  • Recent hard enquiries into your credit status by other lenders
  • Account overdrafts
  • If you are linked to other borrowers through a loan or joint account

Note that a mortgage credit check does not show your bank statements. You will have to provide those yourself to enable the lender to conduct an affordability assessment on you.

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Does a Mortgage Check Affect Your Credit Rating?

A hard credit check can affect your rating, but a soft check does not. When a lender conducts a credit hard credit check, it is reported to the reporting agency as an inquiry. Therefore, whether you are applying for a mortgage, credit card loan, or any other type of loan, a hard check will reflect in your credit report.

While the inquiry itself is not an issue, multiple inquiries can raise eyebrows among mortgage lenders. Lenders may take them as an indication that you are in a financial crisis and reliant on credit. Therefore, they may see you as a risky borrower in that if you have multiple loans, there is an increased chance that you may miss payments. Lenders may also interpret it to mean that you are reliant on lending. Both scenarios diminish the number of potential lenders willing to accept your application.

Due to the negative impact that multiple enquiries have on your creditworthiness, you must be smart about your loan applications and credit checks.

First, take advantage of the 45-day window. Most credit agencies have a 45-day period within which multiple hard checks are recorded as a single inquiry in your credit report. The 45-day mortgage check window period enables you to shop for multiple mortgage lenders without impacting your credit score or history.

Therefore, if you intend to submit multiple applications, start by identifying potential lenders. Then, submit the applications around the same time—preferably at the beginning of a new 45-day window. The multiple pre-approval checks will not affect your credit as long as the last one is within 45 days of the first one.

Since mortgages take two to six weeks to be approved, submitting your application early into the 45-day window means that the inquiries will not spill over to the next period, regardless of whether the lender conducts the hard check early or later into the mortgage approval process.

Secondly, avoid applying for multiple loans a few months before applying for a mortgage. The 45-day window applies to mortgage lenders and brokers’ credit cards only. If you apply for a credit card loan or an unsecured loan, each hard check that potential lenders conduct is recorded as an enquiry. Most credit bureaus keep hard searches on record for 12 months.

Are There Lenders Who Do Not Conduct Mortgage Credit Checks?

Rarely will you find a mortgage lender who does not conduct a mortgage check. However, the extent of the check varies from lender to lender. Some conduct a soft check, while others conduct both soft and hard checks.

Why You Should Conduct a Credit Check Yourself Before Applying for a Mortgage

You must check your credit status before applying for a mortgage. It is an opportunity to check for any errors in your credit report and correct them in time for your mortgage application. It also helps you to have a better understanding of your current credit position to be able to negotiate with potential lenders more effectively

If you check your credit score several months in advance, you may have an opportunity to improve it.

For example, repaying any existing loans, keeping up with your payments, not applying for new credit unnecessarily, or paying your bills on time can boost your credit score. Or, if you notice that your credit score is too low, you may opt to give yourself more time before applying for a mortgage.

The good news is that, unlike hard checks by lenders, when you run a credit check on yourself, it does not leave a footprint on your credit report. The credit inquiry registers as a soft check. Also, you do not have to pay to check your credit status.

You can sign up for a monthly subscription with the three credit bureaus to check your score and download your credit report. Equifax has a free 30-day trial that you can take advantage of.  It is best to check your credit reports from all the three bureaus, as you do not know which one your lender will refer to. Platforms such as CheckMyFile enable you to access all three credit reports from one place. Also, there might be variances in the three reports, allowing you to correct inconsistencies and inaccuracies.

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Work with a Mortgage Broker to Help You Pass your Mortgage Credit Check

A mortgage broker can be invaluable in helping you to pass your mortgage check. They have broad experience from working with different lenders and understand what particular lenders look for in a mortgage check. Whether you have good or bad credit, they have in-depth knowledge to enable your application to go through.

They also recommend the best-suited lenders depending on the principal amount, deposit requirement, and qualification criteria. This way, you do not have to submit applications to too many lenders, resulting in numerous hard checks that can negatively impact your credit history. They can also offer tips for improving your credit score and credit history leading up to a mortgage application.


Do mortgage brokers perform credit checks?

Mortgage brokers need to have a clear understanding of your credit status. It enables them to assess your credit history accurately, match you with suitable lenders, and negotiate your application. Therefore, they will most likely ask for your permission to conduct a soft or hard check. Alternatively, they can ask you for your credit report. If you have bad credit, they will match you with a bad credit mortgage broker to guide you through any issues you may encounter with our application.

Does a credit check affect your mortgage qualification?

Your mortgage credit check findings are vital determinants of whether you qualify for a mortgage. Chances are, if you have a good credit history and high score, you will get an offer and close within a few weeks. It also enables you to negotiate for a lower interest rate and a favourable payment plan.

However, bad credit or credit issues do not necessarily spell doom for you. It depends on the lender’s perspective. For example, if your credit report indicated several instances of defaulting a few years ago, but recently you have been diligent with your payments, the lender may overlook the bad credit history in the past.

Is a mortgage credit check the same as a credit score?

A mortgage credit check is not the same as a credit score. A credit score is a three-digit number that gives an overview of your creditworthiness. Different scoring methods and mathematical formulas are used to calculate your credit score based on the information in your credit report. On the other hand, a mortgage credit check involves looking at your credit report and credit score to establish your ability to manage debt.

Do lenders charge you for a mortgage credit check?

Some lenders do not charge you a fee for your mortgage check. However, some include the credit report fee in the mortgage application fee. Beware as some lenders overcharge for credit reports. The typical credit report fee for the lender to run a hard inquiry is 30-50 euros.

Does a mortgage credit check affect your credit score?

A mortgage credit check will have a minimal effect on your credit score. It could lower your score by 1-2 points. The effect is almost negligible. Credit scores are categorised into groups within a wide range. All the major credit reference agencies will give you a score, for instance, the Experian method organises credit scores as follows:

0-560 – Very poor

561-720 – Poor

721-889 – Fair

881-960 – Good

961-999 – Excellent

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