Why was I refused a mortgage?

If your mortgage application is refused, it can be not only frustrating but inconvenient, as it can affect or even halt many plans you may have already made.

The Mortgage Advice Bureau now says that the average age of a first-time buyer is now 37, which would make a standard 25-year mortgage take them to 62. However, this figure is likely to creep up, as high house prices up and down the country take first-time buyer ages beyond 40.

The mortgage affordability rules introduced in April 2014 take into account not only how much you are earning, but how much you are spending, and whether you actually have the money to make your monthly mortgage repayment.  It could even lead to longer-term mortgages, potentially taking people past 65.

The consequence for many people though is that credit refusal can often lead to more attempts to get credit – and making multiple applications in a short space of time could have a serious impact on your chances of getting credit in the future.

There are a number of reasons you might be turned down – and finding out what they are could get you back on track.

Low credit score –   Whenever you apply for credit, the company you apply to will normally give you a credit score based on information in your credit report, your application form and any details they have if you’re already a customer. This could include whether you are up to date with payments, whether you’ve applied for, or received, credit with another lender quite recently, your income, and what products you have with them already (if any).

It may be worth checking your credit report for anything that might have reduced your credit score and caused you to be turned down – things like maxed out cards, CCJ’s, late payments, or lots of applications for credit are just some of the reasons.

The Experian Credit Score is a guide to help you understand your credit report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now.

Application factors – Besides the information on your credit report, there could be additional factors involved based on the information you provided in your application. These could include your income not being high enough for the lender’s threshold, the amount of time you’ve spent in your current job, or supplying incorrect or inaccurate information mistakenly on your application form.  So it’s best not to rush it – take your time to fill it out carefully, and don’t guess at answers such as how long you’ve lived in a property, etc.

Lender’s decision – If you’ve been refused, only the lender can tell you why because only they know how they use your credit score.  Lenders are keen to know whether you’ll you be able to afford your monthly repayments should interest rates go up, or if your circumstances change.

If you ask them directly, they should be able to tell you the main reason, and whether the information on your credit report played a part. Then you can take any opportunities to improve things before you decide to apply again for a mortgage.  It’s also worth checking any guidance the lender provides before you apply, so you can maximise your chances of being accepted.

What you can do about it
To help give yourself the best chance of getting approved next time around, one thing to do is to review your credit report before you next make a mortgage application.

It pays to understand your credit report before you apply, as this can give you a good idea of whether you’ll be accepted or not. By keeping your credit report in the best order possible, you may be able to improve your credit score.

If you’ve been turned down for a mortgage recently here are some of your next steps:

  1. If you can, stay within credit limits and keep balances low – The lower your overall balances (not including mortgage), the better.  Simple well-managed forms of credit can show lenders that you can pay bills responsibly and on time each month.
  2.  Try not to make too many applications for credit – each application (mortgage, card, loan and more) is recorded on your credit report, and if you make a handful in a short space of time, it can look to lenders like you’re desperate for credit- the fewer you’ve made in the last 6 months, the better.
  3. Make sure all bills are paid on time – Missed or late payments can have a big impact, but paying on time can really help your score. Doing this can help you build up a good payment history which can stand you in good stead when it comes to next time.
  4.  Register to vote at your current address – Check that you’re registered on the electoral roll at your current address. Not being registered may have a negative impact – many lenders use it to help them double-check that you live where you say you live.
  5. Review your credit report regularly – Try to make sure everything’s accurate and up to date, and in good shape for when you’re ready to apply again – for example that old accounts aren’t showing as still being open at previous addresses, and that you’re not financially linked to an ex.

Following some of these steps could put you in a great position to apply for a mortgage and be confident of getting the deal you’re looking for.

35 thoughts on “Why was I refused a mortgage?

  1. Natalie

    Hi,

    I’ve been reading about how registering on the electoral register can improve a persons credit score – I was just wondering how much this would improve a persons score i.e. does it improve it by a certain number of points?

    Reply
    1. CreditExpert Joe

      Hi Natalie, There isn’t a set amount of points per factor so i wouldn’t be able to say unfortunately. But its good to remember when you apply for credit a lender won’t see the Experian credit score, they will score it themselves based on their own scoring criteria. The voters roll is used to confirm your identity against your address, which is why is useful to register. Check out this Blog which contains further information regarding your electoral roll and the credit report. Thanks Joe.

      Reply
  2. Ed Waite

    I wish there would be more clarity and transparency of how our scores are being derived. What is the basis of the point system etc. After spending an hour with the consultant, I still don’t understand specifically how the system allocates points.

    Reply
    1. CreditExpert Neil

      Hi Ed, I appreciate that you would like more clarity on how credit scoring works, however each lender will have their own method of scoring and this can change depending on the type of customer that they are looking for. Your Experian credit score is a guide to how we believe lenders will rate your information based on our experience of the kind of things that lenders are looking for on a report.
      The score is also calculated from all the information on your report, so it is not possible to say that taking a certain action will lead to an increase of a certain number of points, because other information on the report will also be a factor.
      You may find out guide to improving score useful here.
      Kind regards Neil

      Reply
  3. Nic Owen

    Neil, how will my nephew’s credit score be affected if he cancelled his gym membership with the correct written notice. The gym then still chased him for payment two months direct debits not paid, on the trot. Will this ‘non’ payment, because they lost his cancellation letter, go against him? (The gym have agreed he does not now owe them any payments, as they were wrong). Does my nephew need to clear any credit score notes, as I would think it may be logged against him?

    Reply
    1. CreditExpert Joe

      Hi Nic, we don’t currently have any Gyms sharing credit information with us so this would not affect his credit report. Had it been a case where they did record data with us, as they’ve admitted fault they’d usually then send us an update through correcting the late payments they would of recorded. As they don’t share with us though your nephew need not worry in this instant.

      Joe

      Reply
  4. Paul Lundgren

    Hi, I’m currently navigating the ridiculous world of mortgage applications and have been royally screwed by a broker who has carried out hard credit checks with several banks without my consent. This has lowered my credit score to a point where any application I make is refused. Looking at my report these credit checks are the only negative factor on my profile (I have never missed a payment…ever!) I’m now forced to withdraw my offer on a flat and wait for my score to recover before I can move out. I’m absolutely devastated at losing the flat and angry at the broker. Is there any way to remove these unauthorised credit checks or do I have to wait? I wish I’d read this article sooner! Still, I’m not 37 so I guess I’m ahead of the average age of the first time buyer!

    Reply
    1. CreditExpert Neil

      Hi Paul, I understand that this is a difficult position to find yourself in, particularly when you are still searching for a mortgage. As the searches were conducted without your consent we would be able to contact the companies to query them on your behalf to see if they can be removed. For us to do this please get in touch with your full details and the details of the searches that you did not authorise.
      Searches usually stay on a report for 1 year, but after 6 months they would no longer impact your Experian Credit Score, when we query them we would mark them as disputed so other companies searching your report will know they are being investigated. Kind regards Neil

      Reply
  5. A Sova

    Hi we paid off car loan on 8 sept 2016 and a bank loan on 23 sept 2016 the loans are still showing as debt on the credit file how long will it take to drop off the file ?

    Reply
    1. CreditExpert Neil

      Hi Andrea, most companies will update their information with us on a monthly basis, updates are then checked for quality if any issues are found it can sometimes lead to a delay. We can check for you to see when we are expecting the next updates for these accounts, if you contact us with your details. Kind regards Neil

      Reply
  6. Gareth wilson

    I had a mortgage application refused and I was was told it was down to myself and my wife’s bad credit report and it was experian they use. I’ve registered and checked and they have both came back as excellent why has this happened?

    Reply
    1. CreditExpert Joe

      Hi Gareth, If you’ve been refused, ultimately only the lender can tell you why because only they know their own criteria. If you ask them directly, they should be able to tell you the main reason, and whether the information on your credit report played a part. It’s also worth checking any guidance the lender provides before you apply, so you can maximise your chances of being accepted.
      Joe

      Reply
  7. Melissa

    If you have had a mortgage application cancelled due to an old account being in default is here a way you can resolve this? ?

    Reply
    1. CreditExpert Neil

      Hi Melissa, I’m sorry to hear that you have had a mortgage application cancelled. We keep defaulted accounts on your report for six years from the date of the default. After this they are automatically removed. If you have not yet paid the defaulted account then clearing the balance can help when making an application for credit. When paid the default will be updated to show as satisfied.
      If the account has already been satisfied you may wish to add a Notice of Correction to the entry to explain the circumstances of the default. Lender would then be able to take this into account when considering your application. You can find out more about adding a notice of correction here.
      I certainly wish you all the best with your future applications.
      Kind regards
      Neil

      Reply
  8. Lakshmi

    Hi

    Applied for a mortgage who use experien never been rejected, however me and my husband have been declined. Mortgage company can’t / won’t tell me why. Both of our scores are good so don’t understand why it was rejected?

    Reply
    1. CreditExpert Stuart

      Hi Lakshmi,

      I’m sorry to hear that you have recently been turned for for a mortgage application and are unstandably unsure as to why this has taken place.

      During a mortgage application, it is ultimately up to the lender in terms of the decision that is made and we are not told the reason for why an application is declined. You may want to check out this guide on what to do if you have been turned down for credit.

      Also, you can also contact us if you’ve seen a copy of your Experian Credit Report and we can see if there are any areas that might have affected your chances to obtain the mortgage. You can find our contact details available here.

      Kind regards,
      Stuart

      Reply
  9. Aaron

    Hi , me and my partner have applied for a Mortgage, my broker has told me that the application has been referred. I had a default on the account a few years ago but I did add a Notice of Correction on to my Experian file. Could the Notice be a negative factor?

    Reply
    1. CreditExpert Neil

      Hi Aaron, the notice of correction itself would not be seen as negative but it would mean that your application will refer out of any automated decision making processes.
      This is so an underwriter can read your notice of correction and can then take its contents into account when considering your application.
      Whether the application will then be accepted or not would still remain up to the lender themselves. If you no longer wish to have the notice of correction on your report contact us with your details and we can get it removed for you. Kind regards Neil

      Reply
  10. Robin

    Interesting article. You’ve given some great reasons for loan denial and even better tips as to how to better our chances. I appreciate you sharing your insights with us in regards to this topic.

    Reply
  11. Leanne

    Hi, my partners mortgage been declined, company states something is (still active), his score is excellent although there is a query outstanding reported in 2014.can you explain what this is and if it would have such a negative impact ?

    Thank you

    Reply
    1. CreditExpert Stuart

      Hi Leanne,

      I’m sorry to hear that your partner’s mortgage application was recently declined and I understand that this might be a confusing for you.

      In terms of what you’ve stated, it does seem a little odd that there’s a query that’s outstanding on your partner’s report at this time. Without seeing a copy of your partner’s report, I can’t say for certain what may have caused this, however if you are able to contact us, i’m sure our contact centre will be more than happy to help you out with this.

      You can find our contact details available here.

      Kind regards,
      Stuart

      Reply
  12. Rich

    Hi,
    I have found a house I like and have a 5% deposit, my score is pretty high on experian but after three attempts I have yet to be placed on the electoral role at my current address, will this affect my mortgage application even though I was on the electoral role at a previous address? And as I’ve re applied is there anyway of me letting the lender know that I am waiting to be put on the electoral role? Thanks

    Reply
    1. CreditExpert Stuart

      Hi Rich,

      I can see how waiting for some information to update on your Experian Credit Report is possibly frustrating, especially as you’re looking to apply for a mortgage soon.

      It is possible that not appearing on the Electoral Roll at this time might affect your chances however this would depend on the lenders criteria.

      The good news is that there are steps you can take in the interim period until the information is listed on your report.

      You may want to consider adding a Notice of Correction to let lenders know why the information may be missing from your report and to let them know that you are in fact registered at this time. You can learn more about this here.

      As you’re also looking to apply for a mortgage, make sure you check out our helpful guide on what to do in a mortgage application here.

      Kind regards,
      Stuart

      Reply
  13. Amanda Cotton

    I have just been refused permission to port my mortgage. The port included downsizing and since we are in the tie-in period (6 months to go on 28 month tie-in) I was expecting to pay the redemption fee of 3% on the difference in borrowing. The affordability was not in question, borrowing reduced and payments over £600 less per month. Reason for refusal was that, due to their interest in why I was downsizing, I had vocalised my future hope to undertake a self-build and guessed we may try to sell or even rent out the new property after 2-3 years. They aren’t interested in lending, I was told, on a short-term basis even though I was talking of future hopes rather than plans and even though I was due to be released from the tie-in in 6 months. I’m not sure if you can comment since this is not a credit issue. Far from it, sensible financial planning and living within means do not seem to be rewarded here. Thankyou.

    Reply
    1. CreditExpert Neil

      Hi Amanda, I’m sorry to hear that you had your application declined. Sadly we are unable to give financial advice, an independent mortgage adviser may be able to help your with this issue.
      You may also find our guide on preparing your credit report for a mortgage application useful here Kind regards Neil.

      Reply
  14. Robin Cushing

    I can’t even manage to register for my Experian credit report let alone try for a mortgage. Was told I could not be verified. Now what do I do?

    Reply
    1. CreditExpert Neil

      Hi Robin, I’m sorry that we were not able to verify your identity with the CreditMatcher service. You would still be able to obtain a copy of your credit report as either a one off statutory copy of the report, or the CreditExpert service.
      With both of these services we are able to accept further documentation to confirm your identity, while this option is not available for the CreditMatcher service.
      When you apply for a mortgage lenders may ask for further documents to confirm your ID if they can find little information for you. You may find our guide to getting your credit report ready for a mortgage application here.
      Kind regards Neil.

      Reply
  15. KellyT

    Hi my partner just got refused for a mortgage and we were wondering if his age could be the problem?
    His experian report is excellent, no problems previously, his salary is pretty good and he’s looking to borrow no where near the highest amount that online calculators say he ‘should’ be able to borrow with his annual salary
    However he is 23.. obviously a lot younger than the ‘average first time buyer’ could this be why he was declined?

    Reply
    1. CreditExpert Joe

      Hi Kelly, when you apply for credit it’s only the lender that decides and apart from the credit report they will take numerous factors in to account such as salary age etc depending on their own criteria. If he contacts them again they may be willing to provide further information on why they declined the application.

      Joe

      Reply
  16. Matt

    Hi,
    My experian credit score is in the Excellent region. And I’ve been paying off my debts for the past half a year and I’m out of debt now. But my past 3 month statements don’t look very good as my out goings match income. I’m worried i might be rejected on these grounds.
    What should i do if i am rejected and can’t apply any of your advice above?
    Are there any short term solutions or is it a case of waiting till i have 3 nice months?

    Regards
    Matt

    Reply
    1. CreditExpert Neil

      Hi Matt, sadly we can’t say whether this would lead to you being rejected or not as this would always be up to the lender. Affordability is something that could be considered as part of their calculations. Kind regards Neil.

      Reply
      1. DominicH

        Hi There, We have recently been declined a mortgage switch (fix came to an end) despite us both having scores of 943 (Good) and 979 (Excellent) . There are no adverse credit ratings on our detailed experian file at all.
        This was with 2 seperate banks, and using an experienced mortgage broker. The broker has got our full credit reports and has confimed with the 1st bank (TSB) that we are very much within all the lending criteria on multiples……and also confirmed that they only use experian as a credit score source…they confirmed that it was a credit decline….but can’t see why that would be (their system is a bit of a black box)…

        The broker and TSB have suggested I contact you to see if there can be anything “hidden” on an experian file which is not on the detailed experian report….and if this is the reason for the refusal.

        Reply
        1. CreditExpert Neil

          Hi Dominic, I appreciate that it must be a frustrating position to be in particularly as you have a good Experian Credit Score.

          The information that you see on your Experian Credit Score will be the same information that the lender sees. A lender may also search any addresses that you are linked to, so make sure that you have included any previous addresses in your report application so that any information in your name at the previous address will also appear on your credit report.

          If you have your Experian Credit Report and would like to go through it for anything that could cause an issue, get in touch with your details and we will be able to help with this.
          Kind regards Neil.

          Reply

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