Agreement in principle declined

[Firsttimebuyer1]

Hi,
I’m a first time buyer and I just applied for a mortgage agreement in principle with Nationwide (it was an automatic online process, with a soft credit check only), which was declined due to failed credit file.
It didn’t say what the problem was, it just said it was due to credit score, and “this may not be due to adverse bureau information”.

I am puzzled. The only thing I can think of is that I accidentally went into my unarranged overdraft twice while a student (2 years ago) but now I have a full time job with a good salary so it won’t happen again. I’ve got 2 years of a solid income and no debts other than student loan.

I am viewing a house on Saturday and had hoped to het the AIP so I could potentially make an offer.

What should I do now? Shall I try for another mortgage in principle with Halifax or another bank that does soft credit checks only, to see if I get a different outcome from them, or is that unwise? Does this mean I won’t get a mortgage from anyone?

Any advice appreciated!

A mortgage broker will tell you how much you can borrow. They will know what credit agencies certain banks will use

When I got a mortgage I spent 6 months working on my credit score things like making sure your on the electoral roll adds points. Also get a credit card and use it and pay it in full every month. Every payment made increases your score. You really shouldn't go for a house before seeing a mortgage advisor/broker

Checking your credit file has no impact on it at all! You could check it every day if you wanted to, there’s no reason at all not to check it!

It could also be the inheritance too. My bank wouldn't take any deposits that weren't 100% savings from the applicant since covid.

Broker and check your credit file soft searches dont show up.

Just use clearscore or an equivalent it sets you up with a profile and links all your accounts. Then it gives you a score, red is bad green is good. Then it just emails you if your score changes at all and what the reason is. Setting this up and checking now won't impact your credit score I would have thought, it's the credit checks banks do when you apply for something that impact your score if you have too many in a short space of time.

I check my score monthly.
In you're position I would be inclined to use a mortgage broker.
Please dont apply for any further mortgage in principles as this can have an affect on you're credit score.

Check My File is the best one and no it won’t affect your credit score.

So much misinformation out there.

checking score is fine - hard searches can impact it. Free monthly checks are just fine.

Okay, thanks everyone! I just used Clearscore and it was 550, which is apparently good?

What @PurBal said. Worth their weight in gold!

Checking your own credit score doesn't affect it. Making multiple applications for credit (with a hard check) in a short period is what damages your credit rating. It makes it look like you're struggling to manage you money and thus a risky investment.

Right I’ll get myself a mortgage broker tomorrow. Thanks so much everyone. I feel reassured!

The score is immaterial. What is on there? Are you utilising much of your agreed credit? Have you missed any payments? Have you got any CCJs or other credit defaults?

That's what they care about. If you can't see anything of worth on there, then try another lender. L&C brokers do their own AIP and then place you with the most appropriate lender - difficulty being when I tried with them it was 6 weeks before I could get an appointment.

Nationwide declined us but we got one with natwest

I used to work for Nationwide in Mortgages and the scoring system is pretty harsh but I imagine it'll be your lack of credit. If you have no credit other than exceeding an overdraft it won't look great, they like to see history of you paying credit on time. From what I recall the search shows detailed history for the last 12 months (a bunch of zeros if you pay on time) and then a summary of the previous two years or so. Always a good idea just to get a small credit card and pay it off monthly, it's great to have no credit but not great for your credit file as it doesn't show you have history of paying anything on time. As PP have said I'd go via a broker and do a credit check.

Considering when I had my first mortgage Nationwide and Halifax were the only 2 who lent to women, Nationwide are very picky now. I got a mortgage last year from Barclays at the age of 73.

Lots of good advice here.

I would highly recommend a broker. We used CMME and they could not have made the process more simple.

After using a broker, we wouldn't go back to going to just one lender.

Experian and Equifax are £2 each, fixed by law so everyone can use them( You have to get past the monthly sign up stuff on the site online).
It won't cost against you. You biggest problem is probably you have a short financial history, not necessarily a poor one.

OP are you registered on the electoral roll at your current address? This can influence your credit score.

I have really improved my credit score by increasing my credit card limit to £5k and using it (previously i never touched it). I just buy a few things each month and pay it off.

Long-standing accounts, length of time on the electoral roll etc are all factors too. I use Credit Karma and it following the advice there has helped push mine into Excellent.

I read the clearscore info more carefully.
I am on the electoral role and 7/7 of the key things were ticked.

I do have one mark against me for payments- one missed payment in 2016. I remember this, I went abroad and accidentally ended up with a huge roaming phone bill. When the bill came I queried it. Eventually I did have to cough up, but it was late and a palava.
So maybe that’s it.

Having worked in mortgage with a high street lender, yes an unarranged overdraft could have been the deciding factor with them - the thought process being that if you can't manage a small amount of money, how can they trust you with thousands? Sounds silly but that's the essence of it, you look like a risk. That would only be really strict lenders though, most wouldn't be too bothered.

You can check your own credit, or indeed do multiple AIPs with multiple banks and not harm your credit as long as it's a soft check. So worth shopping around.

Also a note on the "score" it's meaningless. Its only what the company eg clearscore, Experian etc think it's worth. Each lender will place importance on different things so you don't have one fixed score, what Nationwide think is different to what Santander would think etc etc

It could well be the missed payment OP. That can easily be enough to put lenders off - speaking from experience

Oh dear @Justletmebuyahouse has it stopped you from getting a mortgage?

Find a mortgage advisor ! This happened to me I paid him £100 and he got me everything I needed and more and now living in my dream home