Credit score is a method that estimates the risk of extending credit to a given customer. Scoring uses a variety of factors to estimate a customer’s probability of repaying a loan. It allows the bank to assess the credit risk of a loan applicant by comparing it to other people who have already repaid. The bank takes into account many factors that affect the granting of a mortgage. In the case of mortgages, scoring is particularly important because these loans usually have long repayment periods and high amounts. Banks use special computer programs to assess their customers. They have access to data on millions of customers, so the computer programs automatically assess whether a prospective bank customer is trustworthy.

Factors that affect scoring in mortgage loans

There are many factors that affect mortgage credit score. One of the most important factors is the customer’s credit history. Customers who regularly pay their bills and loans tend to have a higher credit score than those who have late payments or unpaid debts. Another important factor is the amount of the own contribution. The larger the own contribution, the lower the risk for the bank. Are these all the factors that affect a prospective borrower’s credit score? Unfortunately not, when verifying a loan application, the bank pays attention to:

  • Age
  • The amount of monthly income
  • Liabilities
  • Education
  • Occupation/industries performed
  • Marital status
  • Housing status
  • Number of dependents

Factors positively influencing the assessment of the prospective borrower:

  • No dependents
  • Stable employment
  • Amount of earnings
  • Savings
  • Lack of financial obligations and if there are any, the key is their timely repayment

What can you do to take care of your credit score before applying for a loan?

If you are considering a loan then know that you have an impact on most of the parameters that the bank takes into account during the scoring process. Given that it takes several months or even years to get a good score or improve a previously broken one, start taking action now:

  1. Try to get stable employment
  2. Pay your debts on time
  3. Cancel your credit cards

Scoring is very important in the process of applying for a mortgage. The credit score affects the bank’s decision to grant a loan and the conditions under which the loan will be granted. If you have a low credit score, the bank may refuse to grant you a loan or reduce the amount, which may not be enough in the process of buying the property.