Today, more and more people are paying much more attention to their credit ratings. Consumer awareness of credit quality assessment is now stronger than ever. I would say that at least half of the people who are contacting us for the first time have already looked at their credit report online. There are a lot of credit agencies out there. Most people have heard of Experian or Equifax, but the free trial version we recommend to potential new customers is available with Check My File. This is available on this report “sweeps” several of these reference agencies and summarizes the information in a color encoded report easily understandable. Customers often ask if we will do a credit search on them because they know that too much research can have a negative impact on their creditworthiness. Lenders always conduct credit checks, but we always ask that a customer request permission before doing so. There are 2 different types of credit search that banks can perform on a customer: hard or soft. The need for a “DIP policy decision” with a credit check is motivated by the objectives of each mortgage lender. Large quantities of mortgage lenders like Halifax and Santander would simply use the automated process to whip candidates they don`t want to lend to, comfortable knowing they can do their goals with lower prices (interest rates) if they need to.
Specialized mortgage lenders like Precise Mortgages use credit check to determine the mortgage product in accordance with the risk to them. B for example, registering mortgage arrears could be a more expensive product than a client who has always paid on time. The search for credit is deeper than soft searches. The main difference between difficult and gentle searches is that difficult searches can affect your credit score. Anyone who looks at your file in the future will be able to see that you have had a difficult search on your partition. This won`t really affect you if your credit score is high. If your score is lower and you have more than one difficult search in your file, it might seem like you`re trying to ask for a lot of credit at the same time. It depends on the type of research the lender decides to take. This involves both flexible and hard credit research: lenders will likely conduct credit checks if you are applying for a mortgage in principle. However, some lenders may do “soft research” and others “difficult research.” A flexible search records credit quality verification as a query, while a difficult search indicates that you have applied for credit. If you have too much difficult research in your credit report, this may suggest to lenders that you may have difficulty repaying your loans. You can check with a lender if they are running a gentle or difficult search before applying in principle for a mortgage.
“An AIP agreement in principle” can mean different things to different mortgage lenders; Some consider this to be a first oral indication, i.e. They present the scenario (usually the most important points) and an underwriter gives a verdict. For example, you could reveal that you had a loss of $250 on a water bill, it does not follow that the mortgage lender must carry out a credit check to confirm what you have already said, they simply comment on the probability that this is accepted. If you have a mortgage in principle, you can show sellers that it is likely that you can afford the property you want to buy. This could help if you choose between more than one buyer. If you are worried about bad credit, a mortgage could in principle give you an idea if a lender thinks you can afford to pay off your home loan. The first stage of a mortgage is an agreement in principle (AIP) and may include a credit check depending on the mortgage lender.