Credit scores and first-time buyer mortgages
What lenders look at, what the entries on your credit file mean, and what you can do before you apply. Get your Equifax credit report free with us.
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Why your credit file matters
Every mortgage lender looks at your credit file before it lends. It tells them how you have managed borrowing in the past, and it is checked alongside your income, deposit and outgoings.
For a first-time buyer, the file is often the part you have not looked at. Errors, old addresses, missed payments and accounts you forgot about all appear on it. It is better to find them before an application than during one.
Get your credit report free with Aspect
When you enquire with us, you get your Equifax credit report at no cost. Once you have completed your initial ID checks with us, the report is made available on our client portal.
We go through it with you before any application is made: what is on it, what a lender will see, and what can be fixed first.
Credit score vs credit search
Credit score
A number calculated from the information on your credit file. Experian, Equifax and TransUnion each calculate their own, on their own scales, so the same person has different numbers with different agencies. Lenders do not use the agency's number as such; they apply their own scoring and criteria and do not publish them.
Credit search
A record that a company looked at your file. A soft search is visible only to you and does not affect your score. A hard search is left when you apply for credit, other lenders can see it, and it stays on your file for 12 months.
Lenders that search instead of scoring
Not every lender relies on a score. Some lenders on our panel look at your credit file and assess the entries themselves, including the type, size and date of anything adverse. That means a file that a scoring lender would decline can be looked at differently elsewhere. Which lenders do what is part of the advice we give, and it is why the order in which you apply matters.
What the entries on your credit file mean
Arrears - payments on an account that were missed or paid late. Lenders look at how recent they are, how many, and how long they went on.
Late payment marker - a record that a payment was made late. Stays on the file for 6 years.
Default - recorded by a lender after a run of missed payments on an account. Paying it off does not delete it: it shows as satisfied or settled and stays on the file for 6 years from the date of the default.
County Court Judgment (CCJ) - a court order to repay a debt. Stays on the register for 6 years. If it is paid in full within one month of the judgment, it is removed from the register.
Dormant account - an account that is open but has had no recent activity. It is not a missed payment.
Hard search - a record that a lender checked your file because you applied for credit. Stays on the file for 12 months and is visible to other lenders.
Soft search - a record that is visible only to you, for example when you check your own report. No effect on your score.
Financial association - a link to another person's file, created by a joint account or joint credit. Their entries can then be seen alongside yours. The link stays until a notice of disassociation is filed with the agency.
What it means for first-time buyers
Adverse entries are not an automatic decline. Lenders look at what the entry is, how much it was for, how recent it is, and whether it was settled. A small settled late payment from several years ago is not the same as a recent default.
A file with little or nothing on it is also a factor. If you have never had a credit card, loan or phone contract in your own name, a lender has little to go on, and the way to fix that is different from repairing a damaged file.
Because lenders differ in how they treat the same file, the lender you choose matters as much as the file itself. That is where an independent broker with 100+ lenders earns its fee: we match the file to the lender rather than the other way round.
How to improve your credit score before you apply
Register on the electoral roll - credit agencies use it to confirm your name and address. If you are not on it at your current address, register at GOV.UK: register to vote.
Keep all your credit at one address - use your current address on every credit account, bank account, phone contract and utility. Update old addresses, and make sure your name and spelling match across them all.
Check your report and fix errors - look for accounts that are not yours, wrong balances and wrong dates, and ask the agency to correct them. We can go through it with you once your free Equifax report is on the portal.
Pay on time - set up direct debits for at least the minimum on every account. Recent late payments weigh more than old ones.
Use a small part of your limit - high balances against your credit limits show on the file. Keeping balances well below the limit looks better than using all of it.
Do not close old accounts without a reason - an account with a good payment history adds to the length of your history.
Avoid lots of applications at once - each hard search is visible to lenders for 12 months. Apply only when you need to.
Cut ties with old financial associations - if you have a joint account with someone you no longer share finances with, close it and file a notice of disassociation with the agency.
If you have no history - take out a credit card or phone contract in your own name, use it a little and pay it in full each month, so there is a record to see.
Frequently Asked Questions
How do I get my free credit report?
Enquire with us, complete your initial ID checks, and your Equifax credit report is made available on our client portal. There is no cost to you.
What is a good credit score?
There is no single score. Each agency has its own scale and each lender applies its own criteria, which they do not publish. What matters is what is on your file and which lender you apply to.
What is the difference between a credit score and a credit search?
A score is a number calculated from your file. A search is a record that a company looked at it. A soft search is only visible to you; a hard search is visible to other lenders for 12 months.
Will checking my own credit report affect my score?
No. Checking your own report is a soft search, visible only to you.
Can I get a mortgage with a default?
It depends on the lender, the amount, how recent it is and whether it is settled. Some lenders score and some assess the file themselves, so the answer differs between them. Speak to an adviser before applying anywhere.
How long do defaults and late payments stay on my file?
6 years from the date they were recorded. Settling a default does not remove it, but it shows as settled.
I have never had credit. Is that a problem?
It can be, because a lender has little to assess. See "If you have no history" above.
Does being on the electoral roll help?
Yes. Agencies use it to confirm your name and address, and a lender cannot easily verify you without it.
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