What is Credit Scoring?

Most UK Lenders use credit scoring when deciding whether to agree to give a mortgage.

This works in the following way. Banks and Building societies use data they have accumulated, an enter it into a mathematical formula to assess the amount of money they will give, the result being your "Credit Score".
You would get more points for things like your financial situation and stablility and would lose points if you have had bad credit in the past or are paying other loans back currently. The formula is there to protect both lender and borrower by lowering the risk of you not being able to make the payments, which would ultimately cause you to lose the property.

Each lenders will have a slightly different points system so its worth shopping around. We as experienced brokers have seen applications fail with some lenders but presenting the same details to another mortgage lender will get accepted.

The credit scoring systems are not shown to the borrowers and are secret. The main reasons for this being that the information submitted could be influenced depending on the questions asked.

If your application passes the credit scoring procedure, you get the mortgage, (subject to the information being retified and valuation of property completed).