Credit Score Basics > How to know if you passed a credit check for a mortgage

How to know if you passed a credit check for a mortgage

Wollit Team3 minute read · Updated 1st July 2024

When you apply for a mortgage in the UK, lenders will usually run a credit check on your credit file to assess your creditworthiness. This check is crucial in determining whether the lender is willing to approve the mortgage and at what interest rate.

Let’s look at how you can know if you passed a credit check for a mortgage and what to do next.

How do mortgage credit checks work?

A credit check is a thorough examination of your financial history by the lender to determine your creditworthiness. This includes reviewing your credit report, which details your past borrowing and repayment history, as well as your current financial situation. The check is used to figure out how risky you are to lend to, and to determine whether you can actually afford the mortgage repayments.

When you apply for a mortgage, you’ll go through two credit checks:

A “soft check”, which is not visible to lenders and won’t affect your credit score. This check is only needed to determine your eligibility and to offer you a Mortgage in Principle, which you can then take to sellers to show that you’re a serious buyer and that lenders are prepared to offer you a loan.
A “hard check”, which is visible to every company checking your credit file, and which does affect your credit score. This check is a required part of every loan application.

During a mortgage credit check, lenders typically look for several key factors, like:

A good credit history with no missed payments, defaults, or other negative marks. This shows that you have a track record of borrowing responsibly and paying that debt back on time.
A low credit utilisation ratio. This is the ratio between how much credit you have available and how much you’re actually using. A lower one is generally considered better, as it shows that you’re not over-relying on credit.
And a good credit score. A score above 881 for Experian, 670 for Equifax, or 604 for TransUnion, indicates a lower risk for the lender.

However, lenders don’t stop at a credit check alone. They will also run an affordability check, to assess your income and expenditures so they can figure out whether you can actually afford the mortgage repayments.

This includes reviewing your employment history, income, and regular expenses such as utility bills and loan repayments. It also includes looking in detail at your current debts to determine your debt-to-income ratio.

Lenders use a combination of these factors to decide whether to approve a mortgage application. They will also consider their own lending policies and the specific mortgage product being applied for. For example, some lenders may be more lenient with credit scores if you have a stable income and a low debt-to-income ratio.

How do I know if I passed a credit check?

If you passed a credit check, you should know very soon. Soft checks are almost instant since they’re run entirely online, and you should see the result often within seconds and straight on the lender’s website. A soft check for a Mortgage in Principle might take a bit longer but you should still have your result within the same day.

However, getting the result from the hard credit check when you go ahead and apply for the mortgage might take up to a week. It all depends on the lender, their policies, and which service they use to check your credit report.

You might also want to keep in mind that if you added a Notice of Correction to your credit report, it might delay getting your result a bit. A Notice of Correction is a short note that you can add to your credit report to give lenders some context about some negative bits from your credit file – for example, if you missed a payment because of illness or job loss. Lenders are required to read these, which might sometimes delay the process a bit.

What if I fail a credit check?

If you fail a credit check, it does not necessarily mean that you will be denied a mortgage. However, you may face stricter lending terms or higher interest rates, and this matters quite a bit. In fact, even if approved, you might actually decide that it’s not worth getting a mortgage on bad terms.

Take this example: let’s say you get a 30-year mortgage for a property worth £500,000, and your deposit is £100,000. An increase of just 1% in interest rate might seem small on paper, but over 30 years it can add up to over £90,000. That’s almost as high as your original deposit.

In some cases, you may need to improve your credit score or work with a mortgage broker to find a lender that is more lenient with credit scores.

This is why it’s so important to work on your credit score before applying for a mortgage. The good news is that now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies. This helps you build your credit history and gives you a chance to improve your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders that you pay your bills on time, helping you make the most of your rent while you get ready to become a homeowner.