How a hidden Black Mark on credit score affects mortgage chances.
Credit checks are an important part of the mortgage application process. When going through a mortgage, loan or credit card application, the mortgage issuer will run checks on your background to make sure that you are those associated to the mortgage are creditworthy. Occasionally when the results come back there may be a surprise “black mark” against your credit score. This happened to one of our contributors, Anthony, here is his story on how a hidden black mark on credit score affects mortgage chances.
The mortgage I had was out of its fixed term and I decided to shop around to re-mortgage with other providers. After doing some research online I had decided to contact a major high street bank and see what deal they could offer me. The mortgage lending rules had changed recently and the mortgage lending council had tightened up on the application process. So I set up the initial interview with a mortgage advisor at the bank. Passed the first hurdle in which they ask a lot of questions. Have no problem with this and can fully see the reason behind the stricter guidelines in place. I Agreed to go back in for a further meeting to discuss the mortgages in detail.
The second meeting was even more detailed and had to give a lot more information for back ground checks etc. This is when the results brought back something unexpected. The mortgage deal I wanted couldn’t proceed due to a “black mark” on my credit rating.
I didn’t have any outstanding loans or credit cards and had never missed a payment on any credit facilities at the time and the bank couldn’t tell me why I failed in my credit search. Leaving the branch, I was confused and angry as I was sure that my credit check would have come back positive.
Credit Check for Mortgages
Whilst watching TV that evening an advert came on the TV for a credit checking website offering a free monthly report on your credit score. The company was Clearscore.com, I have no affiliation to this service and at the time of writing there are other providers offering this service like Experian, Noddle and Equifax. I registered my details with Clear Score and this enabled me to see what the bank was seeing. The report is interesting to see as it lists things like insolvency data, whether you on the electoral, whether any accounts are in arrears, your largest credit card limit, the amount outstanding on your credit card, whether any loans or mortgages have been in arrears and your current telecoms bill.
It lists your credit score and compares it against the average score in the area and average UK score. I was below both of these. I clicked on another tab and there was one negative factor listed. I had one default / repossession marked against an old mobile phone contract. This didn’t make any sense at the time, so I had to do some digging. It listed who I had the mobile contract with.
I phoned the help desk at Carphone Warehouse, after going through a number of departments and speaking to a few representatives it was made clear that it wasn’t CPW who had put a black mark against my credit score but the mobile provider had and would have to get in contact with them, in this instance it was Talk Mobile.
Again, after going through a lot of departments I was finally speaking to somebody who could at least tell me what was going on. I had taken out a mobile phone contract for my daughter. The contract had ended and I had decided to go to another provider, so I cancelled the contract with Talk Mobile and ended my direct debit with the bank. According to Talk Mobile There was a small outstanding payment due. They decided to put a black mark automatically against my credit file. They didn’t inform us in writing but said that they had text the number that I cancelled with a reminder (great logic there- Talk Mobile!). if they had written, I would have cleared the balance immediately.
This small mistake had cost me the chance to re-mortgage, a lot of time and hassle and put other lending at risk. I have managed to rectify the situation but the reversal on the credit score can take months and have a huge impact on families.
A google search showed that this isn’t a problem endured just by me. This is Money ran a similar story in June 2016 and reported that 1 in 3 credit scores may be inaccurate in the UK.
My advice would be to check with one of the free credit reference agencies prior to the mortgage, loan or credit card application as this may save a lot of unnecessary chasing around.