By Ed Emerson
Most people completely overlook the importance of the first rule of trying to get a UK self-employed mortgage: Check with the credit reference agencies before you apply.
Why? Well, sometimes folks just assume that everything must be o.k. because they think they’ve never missed a payment.
Or maybe it’s not worth the cost or effort to them to contact Experian, Callcredit and Equifax (the three main agencies), or worse, that any suggestion of poor credit is some kind of personal insult and that it must be an aberration or mistake on the part of a lender.
But in reality it’s none of those things. It’s every UK self-employed mortgage seeker’s responsibility to know what the bank will look at when they check with one or several of the credit reference agencies before you even think about applying.
I can tell you that from personal experience.
A late payment or three, and a seemingly random and unrecogniseable notice (or so I thought) on one of my reports, quickly turned the tables not only on my first mortgage attempt, but all of my efforts thereafter because of my oversight, bad assumption and just plain old arrogance.
Dumb, dumb and dumberer.
And it makes things exponentially worse when you’re applying for a mortgage as a UK self-employed mortgage seeker. That’s because you already start as an unknown commodity, someone outside the standard application regime, and that can lead to either:
- Additional scrutiny, a lengthier application processes and a higher probability of a “black mark” on your credit report due to a failed application, and/or
- The rejection of your mortgage application outright simply because you’re not a full-time employee and they don’t know how to “rate your application and earnings.”
I’ve been through this process myself and I’ve heard all the justifications for why folks never checked their credit first.
And I can tell you from experience that what happens next is you end up frustrated, probably with a property deal on the line and a likely rejection “black mark” on your credit report, which you then defiantly carry with you to every lender thereafter.
The easy answer is to check your credit before you apply and that’s it, right?
Well, yes. But that can get expensive.
The three credit reference agencies will each give you an initial free period once you register with them, and then charge you about £15 per month, each, thereafter.
And if you find something wrong this will become a £45 per month ongoing cost until you can see the problem has been corrected on all three.
Now, there’s also the more recent free offering called Clear Score. While it’s a recommended first stop, you need to know that Clear Score only offers you your credit information from Experian, and not the other agencies, And it won’t allow you to make any changes to your report if there’s something wrong.
We found a service that let’s you see your credit information from all three of the main credit reference agencies. It also has a free sign up period, and it costs less than half the price of signing up to Experian, Callcredit or Equifax.
Want to know more?
Why not see what HNW Magazine’s Self-Employed Mortgages section here has to offer you in terms of advice, guidance and options.
And look out for HNW Magazine’s report The 5 Steps to a UK Self-Employed Mortgage out soon, and take advantage of the mistakes others have made so that you don’t have to.
Ed Emerson, Editor, HNW Magazine