Nearly 2M Could Face Property Disappointment Due To Credit Concerns

Many looking to buy a property in the next year failing to understand credit basics when preparing for a mortgage application.

London, UK, 21 January 2015 - Experian, the global information services company, today reveals that more than a quarter of people in the UK looking to buy their first home before 2016 – some 1.81 million people[1] – have missed credit repayments, defaulted accounts and CCJs currently listed on their credit report, all of which could prevent them from securing a mortgage.

In spite of this, 75% of potential buyers interviewed stated that they believed their credit history to be good or excellent. This highlights the extent to which many people struggle to manage credit accounts such as credit cards, mobile phone contracts and even some utility services in order to build and maintain a good credit rating. 

The findings, based on an independent survey of over 2,000 people suggest that a large proportion of would-be buyers may be failing to understand what lenders are looking for and how to best prepare for a mortgage application. A quarter (27%) of would-be buyers have one or more missed payments on their credit report and another 9% have defaults – both of which are double the national average (13% and 5%, respectively). A further 5% also have court judgments or insolvencies listed on their credit report which is likely to significantly decrease the likelihood of securing a mortgage.

Would-be buyers credit confusion

Minimum Payments: Potential first-time buyers are twice as likely as the general population to repay only the bare minimum of their card borrowing each month (20% opposed to 10%) – and far less likely to clear their balances (44% opposed to 61%). Meeting just the minimum agreed card repayment could be viewed as a sign of financial stress by lenders who want to see that the individual is able to replay any credit granted to them.

New Credit Applications: Nearly two fifths (37%) of survey respondents were found to have taken on extra borrowing in the last six months, which could worry lenders that they may be overextending themselves, and many lenders would look to wait until the applicant had demonstrated they can manage this new borrowing well before making the decision to accept them for further credit.

Credit Balance: 29% have seen what they owe on credit and store cards increase over the last 12 months with one in ten (10%) increasing borrowing significantly during this period.  This could also cause mortgage lenders concern.

Credit Management: In spite of 87% stating that they recognised that having a good credit rating is important for their future financial situation, only 51% of would-be buyers have checked their credit report recently. Furthermore, only 49% are actively working to improve their credit score before making their application in spite of the fact that building a good credit history is a key factor in securing a mortgage, and also getting the best rates.

Julie Doleman, Managing Director, Experian Consumer, commented: “Despite the fact that that there are over 27% more properties on the market in the UK this year compared to last[2]and that some mortgage lenders are offering their lowest ever interest rates, lenders are still required to thoroughly assess what you can reasonably afford to borrow and are still likely to have strict lending criteria. A single missed payment or even a defaulted account from five years ago could be the difference between being accepted or declined.

“If you’re looking to purchase a property in the near future, take time to understand what lenders are looking for and how to manage your current credit in a way that paints the best picture of your financial situation before you make your application. This will give you the best chance of a successful application and of getting the best interest rates.”

Experian advises all would-be buyers, especially first-time buyers, to do the following before they make their mortgage application:

  1. Check your credit reports to make sure everything is accurate and up to date. Tell the credit reference agency you’re using as soon as possible if you disagree with any information on your credit report so they can investigate.
  2. Try and avoid making other credit applications in the six months prior to making a mortgage application, as it could look like you are struggling financially.
  3. Since the introduction of the mortgage affordability rules last year, there has been closer scrutiny on not only your credit history but also your budgeting and financial planning. Try and save a little every month and try and finish every month with a surplus.
  4. Lenders will look at whether the total amount of credit you are using has increased or decreased year-on-year. If you are planning on applying for a mortgage, see if you can bring overall credit usage below what you owed a year ago.
  5. It is vitally important to meet any agreed current repayments you have and paying a little more than your agreed minimum card repayments will not only reduce your balance more quickly but will also be a positive factor for your Experian Credit Score.


Notes to editors:

Research was carried out online by eDigital in December 2014 among a representative sample of 2023 adults.

For more information please contact:

Bell Pottinger

Anna Selby – 020 7861 2516 /

Michael Sheen – 020 7861 2461 /

Experian Consumer Services

Joanne Leahy, Head of PR and Communications - 020 3042 4089 /

About Experian

We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft.  In 2014, we were named by Forbes magazine as one of the ‘World’s Most Innovative Companies’.

We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2014, was US$4.8 billion.

To find out more about our company, please visit or watch our documentary, ‘Inside Experian’.

[1] There are 48,844,900 UK adults (ONS) of whom 14% claim to be buying their first property this year, 27% of whom report one or more late or missed credit repayment on their credit report. Therefore: 48,844,900 x 0.14 x 0.27 = 1,846,337.

[2] Key findings from Experian’s Property Index:  The total number of homes that entered the market for sale during October, November and December increased by 27.1 per cent – from 147,852 homes in Q4 2013 to 187,905 homes in Q4 2014.