Mis-sold Mortgage Claims > Mortgage News
Mortgage credit checks punish first-time buyers
Fri, 21 Jan 2011
There is growing concern within the mortgage broker market over the credit reference check or scoring which punishes first-time buyers .

There are three Credit Reference Agencies (CRAs) in the UK; these are Experian, Equifax and Call Credit. These companies hold extensive data on an applicant’s financial profile and history. A CRA search against an individual will leave a footprint or record on the credit file, this could adversely affect a person’s application for credit in the future. Some lenders also apply their own criteria to use credit scoring models when approving mortgage applications.

Industry experts have commented on this issue pointing out that, often there is a lack of information available on first-time buyers who are generally young and buying a home without an electoral roll history. Many are also less likely to have an existing credit history, such as credit cards .

Where lenders use their own credit score system for the approval of mortgages, there are many factors considered which include an assessment of risk of loan to value (LTV). Most FTB’s are seeking high LTV borrowing as they struggle to find deposits.

All these factors are contributing to falling levels of completed mortgage lending and approvals for FTB's. It has been reported that senior figures within the mortgage industry, including John Malone, executive chairman of Premier Mortgage Services, are working with some major lenders to address these issues.
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