My response would be, don’t panic! Individual credit reports are split into two areas, credit history and credit score. Credit history is a record what credit you have and how that credit has been managed. Are the payments on time or late, does this occur regularly etc.

It’s not unusual for people to miss a credit payment now and then or pay something later than the due date. This will show up on a credit report (which is visible to all credit companies) for 6 years and forms part of your credit history.

Because it is not unusual to have these blips, the lenders will take a view on it. Depending on when it happened and how much was involved, it could be ignored completely!

The most common issues here are when an individual moves mobile service provider If there is a final balance to settle after the switch or people move and their post doesn’t reach them, mobile providers are very quick in issuing default notices and this can have an impact on one’s credit history.

Because they act so swiftly and rarely enter into discussions with clients, lenders tend to ignore these issues providing they are low outstanding balances typically between £250-£500.

A lenders view is that credit history is black or white, the details are either correct or incorrect. If it is believed that an individual feels the information contained on their report is wrong then it can be appealed and a record of this left on the credit report.

This is known as a notice of correction. The important thing however, is to endeavour to keep all forms of credit on time and up to date.

The other and probably trickier area, is credit score. An individuals overall personal profile is looked at and each element of that profile attracts a score. So, for example time in a job or how long someone has lived in their home are key parts of credit scoring.

One of the most important bits of information that mortgage lenders look at is if someone is registered to vote and therefore show their details on the voters role or electoral register. If not, this can significantly reduce a credit score.

With credit scoring, lenders are looking for a potential borrower to achieve at least a minimum score (and this is different from lender to lender) to enable them to consider lending. This is looked at in the very early stages of the mortgage process and is referred to as an agreement or decision in principle.

At this point, someone will pass or fail credit score!

Failing credit score doesn’t necessarily relate to a person’s credit history either! We’ve found people with no active credit, not appearing on the voters role or recent or multiple address changes can all cause issues with credit score.

However, as I mentioned at the start, don’t panic.

If a client has a low credit score but has not had any issues with their credit history, then some lenders do not credit score so we can always approach them as an option.

Quite often estate agents will ask a potential buyer if they have arranged a mortgage or have and agreement in principle. This is because they know that the prospective buyer has been assessed and is in a good position to borrow against the property they are looking at.

Here at Compass we have an in depth understanding of credit profiles and more importantly how to improve them!

If you’ve found it difficult to obtain a mortgage and are frustrated at appearing to have a
low credit score then call Compass Mortgages on 01903 815444 and one of our experienced, professional and friendly advisers will be on hand to help.