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Does a Mortgage in Principle Affect Your Credit Score?
July 1, 2025
Quick Answers
A Mortgage in Principle typically involves a 'soft' credit check, which is not visible to other lenders and has no impact on your credit score.
Be aware that some lenders may perform a 'hard' credit check, which leaves a temporary footprint on your credit file and can cause a minor dip in your score.
To protect your credit profile, confirm the lender's process in advance and avoid making multiple hard-check applications within a short period.
What Is a Mortgage in Principle?
A mortgage in principle, also known as an agreement in principle (AIP), is a conditional offer from a lender stating how much they might be willing to lend you. It gives you a clear budget for your property search and shows sellers that you are a serious, credible buyer. However, this document is not a formal mortgage offer but rather a preliminary step based on your initial financial information.
To provide this estimate, lenders need to assess your financial health, which includes performing a credit check. Some lenders use a 'soft' credit check that doesn't affect your credit score, while others may perform a 'hard' check that is recorded on your credit file. A hard inquiry can temporarily lower your credit score, so it is helpful to understand which type of check a lender will perform.
What Is a Mortgage in Principle?
A mortgage in principle, also known as an agreement in principle (AIP), is a conditional offer from a lender stating how much they might be willing to lend you. It gives you a clear budget for your property search and shows sellers that you are a serious, credible buyer. However, this document is not a formal mortgage offer but rather a preliminary step based on your initial financial information.
To provide this estimate, lenders need to assess your financial health, which includes performing a credit check. Some lenders use a 'soft' credit check that doesn't affect your credit score, while others may perform a 'hard' check that is recorded on your credit file. A hard inquiry can temporarily lower your credit score, so it is helpful to understand which type of check a lender will perform.
How a Mortgage in Principle May Affect Your Credit Score
Getting a Mortgage in Principle can sometimes affect your credit score. The impact hinges on whether the lender conducts a 'soft' or 'hard' credit check as part of their process.
- Initial Application: The process begins when you apply for an MIP. The lender needs to verify your financial standing to decide whether to grant you a provisional mortgage offer.
- The Credit Check: To assess your creditworthiness, the lender performs a credit check. This can be a 'soft search,' which isn't visible to other lenders, or a 'hard search,' which is.
- The Hard Search Footprint: A hard search leaves a record on your credit file that other lenders can see. This indicates you have formally applied for credit, which can be a risk factor.
- Temporary Score Reduction: This hard search footprint can cause a small, temporary dip in your credit score. Lenders see it as a potential increase in your overall debt.
- Multiple Applications: Applying for several mortgages in a short time frame can result in multiple hard searches, which may lower your score more significantly and suggest financial instability to lenders.
How Much Will a Mortgage in Principle Affect Your Credit Score?
When you apply for a mortgage in principle, lenders will check your credit history. Here are a few key things to consider regarding the potential impact on your credit score.
- Soft vs. Hard Checks Many lenders use a soft credit check, which doesn't affect your score. However, some may perform a hard check, which can cause a temporary, minor dip in your credit score.
- Multiple Applications Applying for several mortgages in principle in a short time can trigger multiple hard checks. This activity can signal financial distress to lenders and lower your score more significantly.
- Lender's Policy The type of credit check performed depends entirely on the lender's internal policy. It's always wise to ask your potential lender which type of check they will conduct beforehand.
How You Can Avoid a Mortgage in Principle Affecting Your Credit Score
Opt for a Soft Credit Check
Many lenders can provide an Agreement in Principle based on a soft credit check. This initial review gives you an idea of your borrowing potential without leaving a hard inquiry on your credit file, protecting your score while you shop around for the best rates.
Limit Your Applications
Applying for numerous mortgages in a brief period can trigger multiple hard searches, which may negatively impact your credit score. It is best to research thoroughly and only apply for a mortgage in principle when you are serious about moving forward with a specific lender.
Work With a Mortgage Broker
A mortgage broker can search the market for you, often using a single soft check to assess your eligibility with various lenders. This strategy minimizes hard inquiries on your credit report while helping you find the most suitable mortgage deal for your circumstances.
Choose the Right Card to A Mortgage in Principle
No matter your current financial standing, improving your credit score is an achievable goal that is crucial for your financial life. With consistent effort and the right strategies, there are proven methods to boost your creditworthiness and maintain a healthy credit profile.
- Monitor Your Credit Reports: An expert guide suggests regularly checking your reports from all three major bureaus—Experian, TransUnion, and Equifax. This allows you to spot and dispute inaccuracies, detect potential fraud, and track your progress over time.
- Establish Automatic Payments: Your payment history is one of the most significant factors in your score. Setting up automatic payments ensures you never miss a due date, which is vital for building a positive history.
- Reduce Your Credit Utilisation Ratio: Aim to keep your credit utilisation below 30% of your total available credit. You can do this by paying down balances or requesting a credit limit increase on your existing accounts.
- Diversify Your Credit Mix: Lenders like to see that you can responsibly manage different types of credit. Maintaining a healthy mix of accounts, such as credit cards and installment loans, can positively impact your score.
- Limit Hard Inquiries: Applying for too much new credit in a short period can temporarily lower your score. Space out your applications and use prequalification tools whenever possible to avoid unnecessary hard inquiries.
- Become an Authorised User: If you have a trusted friend or family member with a strong credit history, ask to become an authorised user on one of their accounts. Their long history of on-time payments and low utilisation can help improve your score.
The Bottom Line
A Mortgage in Principle may require a credit check. A soft search won't affect your score, but a hard search will be recorded on your file and could temporarily lower it.
Frequently Asked Questions
Will multiple mortgage applications hurt my credit score?
Yes, several applications involving hard credit checks within a short timeframe can negatively impact your score, as lenders may view it as a sign of financial instability.
How long does a hard credit check stay on my report?
A hard inquiry from a mortgage application will remain on your credit report for up to 12 months, though its impact on your score typically lessens over time.
Can I get a Mortgage in Principle without a credit check?
Some lenders offer an initial quote or decision in principle using a soft check, which doesn't harm your score. A formal offer usually requires a hard check.
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