Credit rating vs credit scores – the difference explained
03 March 2021
A recent study by Haysto1 found that 22% of the 2,012 people they surveyed blame bad credit history as the main reason why they are unable to get a mortgage. Furthermore, 70% of the sample are unwilling to even apply for a mortgage because they think their poor credit rating will prevent them being eligible.
A number of recent cases reported in the media have highlighted that individual customers have been refused mortgages due to their credit score being low, however when investigated, the reasons for this credit blip are minimal.
Most recently for example, a couple were refused a mortgage due to an unpaid mobile bill from 5 years previously, worth just £24.2 This can easily happen when people move homes, get divorced or change email addresses. This kind of situation highlights the need for the human touch in the mortgage process and that element of common sense to evaluate the risk on a customer by customer basis.
So, if my credit rating is low, can I still get a mortgage?
There are a number of ways in which mortgage companies can evaluate someone’s eligibility for a mortgage.
The traditional method, used by many high street banks uses an in-depth check of the person’s credit rating through a credit agency. This is a robust score however, it can be a lengthy process and does not take into account the reasons why that person’s credit score is high or low. In the case highlighted above, the customer is likely to be refused a mortgage on the grounds of an easily explicable oversight on a very small bill from 5 years ago.
An alternative option is using credit searches, used by some building societies, including Buckinghamshire Building Society. This method looks at cases on an individual basis so picks up any anomalies in credit scores. This method is primarily done manually by human (rather than computer) underwriters, giving a more flexible and bespoke approach and giving those individuals with unusual circumstances or a lower credit score the opportunity to explain the situation to someone who will listen and find the right mortgage for them.
How can we help?
Buckinghamshire Building Society offer a portfolio of mortgage products for exactly that. Our Bucks Solutions range offers those customers with either impaired or non-standard credit an opportunity to apply for mortgages and this product offering currently makes up 16% of the total mortgages we offer, demonstrating the appetite from the market for such products. (Terms and Conditions apply.)
“We pride ourselves on going above and beyond to find solutions for even the most complicated of cases” said Tim Vigeon, Head of Lending at Buckinghamshire Building Society. “Our human underwriting allows us to look at cases on an individual basis to find the best solution based on that person’s individual circumstances” he continued.
To find out more about us and our Bucks Solutions Products, visit www.bucksbs.co.uk/intermediaries or call Julie Hanif (South) on +44 (0)1494 418254 or Claire Askham (Midlands & North) on +44 (0) 1494 418257.
1 – Haysto Study was a survey of 2,011 UK residents in 2020
2 – As cited in The Times 5th February 2021
