Does an Agreement in Principle Credit Check

When applying for a mortgage, one of the first steps is to obtain an agreement in principle (also known as a decision in principle or mortgage in principle). This is a document from a lender that gives you an indication of the mortgage amount you could potentially borrow, based on your income and credit score.

But does obtaining an agreement in principle involve a credit check?

The short answer is yes, obtaining an agreement in principle typically involves a credit check. This is because the lender needs to verify your creditworthiness and assess your ability to repay the mortgage loan.

When you apply for an agreement in principle, the lender will usually ask for basic information such as your name, address, date of birth, employment details, and income. They will also check your credit report to see if you have any outstanding debts, missed payments, or other issues that could affect your ability to repay the mortgage loan.

The credit check performed for an agreement in principle is usually a soft credit check, also known as a ‘quotation search’. This type of credit check doesn’t leave a footprint on your credit report and won’t affect your credit score. It simply gives the lender an indication of your credit history and helps them assess your affordability.

It’s worth noting that if you decide to proceed with a full mortgage application after obtaining an agreement in principle, the lender will typically perform a more detailed credit check. This is known as a hard credit check, which can leave a footprint on your credit report and potentially affect your credit score.

So, while obtaining an agreement in principle does involve a credit check, it’s usually a soft credit check that won’t have a major impact on your credit score. It’s an important step in the mortgage application process that can help you understand your borrowing potential and give you an indication of the type of mortgage you may be eligible for.

In conclusion, if you’re considering applying for a mortgage, obtaining an agreement in principle is an important step to take. While it does involve a credit check, it’s usually a soft credit check that won’t affect your credit score. It’s always a good idea to check with your lender or mortgage advisor to understand their specific process for obtaining an agreement in principle.