A mortgage is often the biggest loan an individual borrows in their entire life. The same is true for financial lenders, making it important to make the right checks before approving a mortgage application. Credit checks form an integral portion of the checks lenders make as you apply for a mortgage. If you are willing to purchase a house in Harrow, it is essential to know the impact of credit scores on mortgage approval in Harrow. Additionally, seeking the assistance of a reputable mortgage broker Hounslow can be highly beneficial in navigating the complexities of the mortgage process and finding the best mortgage deals in the Hounslow area. They can provide valuable insights, access to a variety of lenders, and help increase your chances of getting approved for a mortgage that suits your financial situation. Make sure to carefully evaluate your credit score and financial standing with the help of a mortgage broker to enhance your chances of securing a mortgage in Harrow.
Along with influencing your mortgage application approval, your credit score will also dictate the amount you are able to borrow. It allows lenders to quantify your credit history and ensure that you will be able to repay the loan on time.
Before understanding the impact of your credit score on mortgage approval, let us briefly understand what a credit score is.
What is a credit score?
Simply put, a credit score is a measure of how credible you are at borrowing money and repaying it on time. It is a numerical representation of your history of borrowings and repayments. If you have repaid all your debts on time, your credit score will be high. If there are defaults and/or late payments in your credit history, your credit score will be low.
However, it is important to know that there is no universal credit score for everyone. Different lenders may interpret your score differently depending on the deal you are looking for and the policies of the lender involved.
What score is a good credit score?
As of now, there are three major credit reference agencies (CRAs) that help you calculate your credit score – Experian, TransUnion, and Equifax. Each of these agencies implements a unique scoring system to calculate your credit score. Here is what is considered a good credit score according to these CRAs:
• Equifax: 420 to 465
• TransUnion: 604 to 627
• Experian: 881 to 960
However, if you wish to get the best mortgage deals in Harrow, here are the credit scores that are considered the best by these CRAs:
• Equifax: 466 to 700
• TransUnion: 628 to 710
• Experian: 961 to 999
To choose the right deals in town and connect with the right lenders as per your credit score, make sure you work with the best mortgage broker Harrow has for you.
How does your credit score impact your mortgage approval?
Your credit score is an important parameter that determines your creditworthiness. Mortgage lenders in Harrow focus a lot on the borrowers’ credit scores before approving their mortgage applications.
If you are planning to purchase a property in Harrow, here are a few ways in which your credit score will impact your mortgage approval:
Sign of responsible borrowing
Your credit score reflects your creditworthiness, showing lenders a sign of responsible borrowing. A high credit score implies that you have been paying off your dues on time, giving lenders the assurance they are looking for. This increases the chances of your mortgage application’s approval.
Loan eligibility
Different mortgage lenders have different eligibility criteria for their mortgage deals. Your credit score determines your eligibility for these deals. Depending on the property you wish to purchase and the deal you opt for, your credit score will help you meet the eligibility criteria, bringing you a step closer to getting your application approved.
Better interest rates
The interest at which you are given a mortgage determines the repayments you will make for a long time. High credit scores make you eligible for deals with low interest rates. They are signs that you are more likely to pay off your mortgage on time, giving much-needed confidence to the lenders as they approve your mortgage application.
Better loan amount
Along with better interest rates, a high credit score also allows you to borrow a larger amount from lenders. It helps mortgage lenders ensure that you are financially stable and capable of repaying your debt without any hiccups. On the other hand, a low credit score will discourage lenders from giving you a big amount as a loan.
Faster approval
A high credit score helps you get your mortgage application approved faster. Lenders often give preference to applications with higher credit scores as compared to the ones with lower credit scores. With a low credit score, you may need to look for specialized lenders and improve your creditworthiness to have your application approved. A high credit score can get the work done smoothly and effectively.
Can you get a good mortgage deal with no credit history?
While it is not impossible to get a mortgage deal with no credit history, it is definitely a difficult process. People often assume that no credit history is a sign of creditworthiness. However, that is not the case. Without any credit history, there is no way for a lender to see how you pay your dues. They require some past reference to make the right decision.
In many cases, having a low credit score is better than having no credit history at all. Without any credit history, you might have to settle for mediocre deals without favourable interest rates.
Can you get a mortgage with bad credit?
While it is difficult, it is possible to get a mortgage with bad credit. You may not get the best deals under these circ*mstances, but specialised mortgage lenders deal with borrowers with low credit. For this, you will need the help of experienced mortgage brokers who can connect you with these specialised lenders.
This makes it important to hire a skilled mortgage broker in Harrow to buy a property in the town. As you look for these professionals, make sure you seek fee-free broker services to save a hefty brokerage fee. Be honest with your mortgage broker about your credit history and financial circ*mstances to get deals that best suit your condition. A reliable mortgage broker in Harrow will scan the entire market and link you to lenders having the right deals for you.
