Does getting a mortgage in principle affect your credit score?

Most lenders use a soft credit search to produce a mortgage in principle, sometimes called an agreement in principle or a decision in principle. A soft search does not affect your credit score and is not visible to other lenders. A minority of lenders use a hard search instead, which is visible to other lenders, so it is worth checking which kind will be used before you go ahead.

What is a mortgage in principle?

A mortgage in principle is an early indication from a lender of roughly how much it might lend you, based on some basic information about your income, outgoings and credit history. It is not the same as a full mortgage offer, and it is not a guarantee. Some parts of it rely on information you provide yourself, which is checked more fully later, at the full application stage.

Soft search or hard search: what is the difference?

The distinction between a soft and a hard search matters more for your credit file than the mortgage in principle itself.

You can normally see on your credit report which type of search was recorded against your file, so checking your statutory credit report after applying for a mortgage in principle can confirm what happened.

Why some lenders use a hard search for a mortgage in principle

A small number of lenders build a fuller check into their mortgage in principle process, partly to give a more reliable early answer. This is less common but not unheard of, so it is sensible to ask directly, particularly if you are shopping around and want to avoid several hard searches close together.

Does this change if you have bad credit?

The type of search used for a mortgage in principle is generally the same policy whatever your credit history. Where bad credit matters more is in what the mortgage in principle reveals to the lender running it. A soft search still lets a lender see a CCJ, default or other adverse credit on your file, even though other lenders cannot see that the search happened. A mortgage in principle from a mainstream lender can come back lower than expected, or be declined, once your credit history is taken into account, which our guide on what to do if your remortgage is declined covers if that happens to you.

A worked illustrative example

Suppose someone applies for a mortgage in principle with three different lenders in the same week to compare their options, an example for illustration only. Lender A and Lender B both use a soft search, so neither shows up to the other, and neither affects the applicant’s credit score. Lender C uses a hard search as part of its mortgage in principle process. That search is now visible to any lender who checks the file later, including Lender A or B if the applicant goes on to make a full application with them. On its own, one hard search is unlikely to cause a problem, but if the applicant also has a CCJ or default already on file and applies to several more lenders with hard searches while comparing options, the combination of adverse credit plus several recent hard searches can look more concerning to a lender than either factor alone.

Common mistakes when getting a mortgage in principle

• Not asking which type of search will be used. This is the single most useful question, and reputable lenders and brokers will answer it directly.
• Treating a mortgage in principle as a guaranteed offer. It is based on limited, sometimes self-declared information. A full application checks everything properly and can still end in a decline even after a positive mortgage in principle, which our guide on what to do if your remortgage is declined covers.
• Shopping around with hard searches instead of soft ones. If you want to compare several lenders, ask specifically for a soft search quote wherever possible, particularly if you already have a CCJ, default or other adverse credit and want to avoid adding several hard searches on top.
• Not checking your file afterwards. After any mortgage in principle, check your statutory credit report to confirm which type of search was actually recorded, since this can occasionally differ from what you were told in advance.
• Assuming a low mortgage in principle figure is final. A mainstream lender’s mortgage in principle may come back lower once your credit history is factored in, but a specialist lender working with adverse credit may offer a different figure. Our page on remortgaging with a low credit score explains why the same circumstances can produce different answers from different lenders.

What this means for a bad credit remortgage

If you know you have something on your credit file, it can be worth getting a mortgage in principle through a broker or adviser who works with lenders that consider adverse credit, rather than approaching mainstream high street lenders one after another. This reduces the risk of repeated declines showing on your file if any of those checks turn out to be hard searches, and it means the mortgage in principle you get is more likely to reflect what is realistically available. Our page on remortgaging with a low credit score explains how lenders in this part of the market approach applications more broadly.

Checking before you apply

Before requesting a mortgage in principle, ask the lender or your adviser whether a soft or hard search will be used, and check your free statutory credit report from Experian, Equifax and TransUnion so you know what is already on file. If a CCJ, default or missed payment is affecting what is on offer, our guide on soft and hard credit searches explained and our page on product transfers, which can sometimes involve less checking with your existing lender, are worth reading alongside this one.