Is your credit rating holding you back?

Published by Chris Thomas on 26 August 2008.
Last updated on 23 August 2011

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Over the past two years I have been trying hard to clear my debts. Although I ended up in debt through a personal loan, I have reduced this with monthly payments, and have cleared outstanding debts on two credit cards.

Once I managed to sort my finances out I checked my credit score and it was rated 'excellent'. However, it has now dropped to 'poor'. I have spoken to the credit website concerned and it says this has nothing to do with non-payments but a result of searches checking my details. I would like to go for mortgage advice soon, but am worried that my low credit score will be a problem.

In the current climate, is there any way I can get around this without mortgage lenders thinking that I am too high risk?


Ask The Professionals: Joanne Roberts, director at online IFA, says:

Based on the information you provided, I have assumed that you have regular access to your credit file via a company such as Equifax, Experian or Credit Expert. If you do, I would recommend contacting the specific firm again for the exact details of the searches that have been done in your name.

There are different types of searches that can be done on your credit file and some of them do not leave a ‘footprint’ that affects your record. The financial services industry has to adhere to strict regulations and we have to be careful not to leave footprints on your credit record when they are not warranted.

I would also recommend that you contact the companies that did searches between the period that your credit file showed 'excellent' and then 'poor', and ensure that the searches were carried out correctly and if they should have been recorded at all. If they were recorded by error, the company can get the details removed - thereby enhancing your credit score.

In terms of you wanting a mortgage, the only advice I can give you is be as honest as possible and tell your adviser everything you know about your credit file. While there are mortgages available for people with poor credit histories, the rates tend to be higher and this could be avoided if your poor credit score is nothing to do with missed payments.

The more information you can find out and provide to your adviser the better. He or she will then take this into account when recommending a suitable product for you and will speak to the lender on your behalf to tell them what to expect to see on your credit file. This proves you are honest and taking your finances seriously.

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