July 31, 2021

MP Now News

Mortgage News

Why were we turned down for a mortgage despite a higher credit score? | Mortgages

Q. My partner and I applied for a mortgage through a broker back in November 2020. At that point, my partner’s Experian credit score was 629 and mine was 964, and we have a Mortgage Agreement (AIP) in place. We couldn’t find a home to buy before our “fundamental” mortgage offer expired in February 2021. That is why we applied for a new one in March. We don’t understand. We were rejected because of our credit score. However, our credit rating is slightly higher than it was in November. We tried other lenders and got rejected again for the same reason.

At the same time, we tried to contact the original lender to give us information about the specific loan number we need. Nobody knows. They don’t even spend time on the phone. Why do we use a credit score system when nobody knows about it? And who is responsible for this system? I want someone to justify why there is no clear information online. Why Do Lenders Not Set Targets For Credit Scores? I need to know which number to target.

A What I don’t understand is why you were told that you were turned down because of your creditworthiness of a fundamental agreement of principle (AIP). When lenders review applications for AIPs, they usually want to know the exact details of your income, expenses and existing loan agreements, as well as all of your addresses for the past three years. Lenders don’t do a full credit check, but instead use one of the major credit bureaus – Experian, Equifax, and TransUnion – to confirm that the information on existing loan agreements matches the information on your credit file. Credit scores don’t come into play. And, according to Experian, even if lenders do a full credit check – for example, if you’ve submitted a full mortgage application, the credit bureau’s score won’t be taken into account.

According to the Experian website, there is no one-size-fits-all credit score system. “Each credit bureau gives you a different score on a different scale. When you apply for a loan, the lenders do not use it [credit reference agency] Result. They use your credit report information, application details, and current history of previous accounts to calculate a total score for you. It is that [lender’s] Bottom line that will help them decide whether or not to accept you. “And just like credit bureaus use different methods of determining your creditworthiness, lenders use different criteria in their credit decisions, with far more weight being placed on the health of your income and expenses than your creditworthiness.

As Equifax says, “A good Equifax credit score doesn’t necessarily mean you will always be successful in getting a loan, credit card, or mortgage application, but it does provide an indication of how lenders might view your application.”

Do you need expert help finding your new mortgage? Use our new online tool to search thousands of offers from 80+ lenders using the Guardian Mortgage Service, operated by L & C.