Credit Reference Agencies

When you apply for a mortgage, acceptance normally hinges upon your credit rating. Lenders will assess your ability to repay what they lend you, by applying either their own credit scoring system to your personal circumstances, or they will contract this work to a credit reference agency... or they will use a combination of both.

Credit Rating

Just about everyone will have a credit rating file. Reference agencies build up an assessment of your financial activity. This information is gleaned from publicly available information (electoral rolls, court judgements, the filing for bankruptcy etc) and from information shared by other lenders (if you default on a loan for instance).

If you are being turned down for credit, or suspect that you may, indeed, have something wrong with your credit rating, you are entitled to see your credit reference file by applying to a reference agency and paying a small admin fee.

The law entitles you to view the information that credit reference agencies hold about you. You can see copies of your files by writing to a credit reference agency, giving your name and addresses for the last six years. You are also entitled to correct any information held on you that is incorrect, by adding a 'notice of correction' and can write up to 200 words on why the information is incorrect.

Credit Scoring

Two of the main agencies are listed below:

Once your mortgage application has been forwarded to the selected lender, that lender will allocate a score to your application.

Credit scoring systems differ from lender to lender, but most operate by allocating points to various sections of your application.

The idea being, that if your application accumulates a high number of points, then the lender will have a higher expectation that your are less likely to default on their loan to you. In this way, if you are already a home owner for instance, then this will attract a higher score than if you were, say, a tenant.

The problem is, that the various rules that individual lenders apply are very different and, as we have said, a borrower can be turned down by one lender, but accepted by another... even though the information given in each application be exactly the same.

Even more problematic for the borrower with a less than perfect credit score, is the fact that a lender is not obliged to tell you or your broker exactly why they have turned you down!