What does 'Credit Rating' mean when buying a property?

Find out what Credit Rating means when you are buying a property. 'What does Credit Rating mean?' plus over 150 other property related terms and jargon in plain English

Credit Rating

Also known as a "Credit Score".

Credit Agencies keep a record of almost every person and assign them a credit rating which is a numerical score heavily weighted to two factors:

  1. How good that person has been at handling debt - known as Credit History. It is based on how well a person has kept up to date paying back loans or honouring certain agreements (such as monthly payments on a mobile 'phone).
  2. A credible record of places they have lived - often relying on the electoral register as the main source.

The credit rating or credit score is a number between 1 (never lend to this person) and 999 (this person is a creditors angel!).

Those who have rented property and not registered to vote or avoided debt often have a poor rating due to a lack of historical data and this will affect how much (or if at all) a lender will provide as a mortgage.

You can check out your own credit rating using a credit agency such as Experian.

I strongly recommend this because credit agencies can have partial and incomplete data. If you are able to provide documented proof that will help them fill in the gaps and resolve any errors you can dramatically increase your credit rating and avoid issues when your mortgage provider carries out their credit check on you.

For more on this and other tips and tricks you can use to make your property purchase go like clockwork pick up a copy of my ebook How to Really Buy a Property.

Search Results for 'credit rating' in
How to Really Buy a Property

"... applied for credit - Every time you apply for credit your credit rating takes a hit, even if you ultimately don't take out the loan. The classic case is with store cards and goes a little like this. Mr X is out on a shopping spree and in several shops he is offered a discount on his purchases if he applies and pays for his purchase with the store's credit card. He has the money in the bank but he could make substantial savings so he takes the cards and pays them off within the month. But each card has represented an application for credit and so hit his rating. It will recover but if he applies for a mortgage in the near future he may be turned down as the lender is suspicous about the amount of credit he has been taking..."

Chapter 13: Your Own Homework
"... your property purchase is going to involve borrowing money it is worth checking your current credit ratings. Many people who have lead a prudent life are often surprised to find they have a very poor rating. Others are also taken aback when a mortgage is rejected because of some event in the past that has long been cleared up but the settlement was never properly passed on to the credit rating..."

Search Results for 'credit rating' in
Property FAQ