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Credit file mistakes increase risk of mortgage rejection

Credit card errors are to blame for more than 20 million people in the UK being refused a mortgage, according to a study by Amigo Loans.

The research also indicates that over a third of people discover errors on their credit reports, leading to being rejected for credit cards, loans and mortgages. A credit score of 720 or less is likely to be viewed as very poor or poor by a lender, and an application for credit is likely to be rejected by their computerised system. Credit scores are used by lenders to determine whether to approve an application for credit, yet just one in eight people check their credit report.

There are a number of factors which could have an impact on credit scores, like missing a bill payment, having an unauthorised overdraft or being refused credit. Experts advise people to check their credit rating prior to applying for a mortgage or other credit, so that any errors or inaccuracies can be corrected.

It is possible to improve credit rating, and one method is to have a credit card and repay the balance in full each month. Making timely repayments can help to boost a credit score. Make sure the address on the credit report is correct, as not being able to confirm your address may result in a lender rejecting an application for a mortgage.

Speaking to a CeMAP qualified mortgage adviser prior to applying for a mortgage may help you to increase your chances of securing a mortgage at a competitive interest rate.

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