Does a Mortgage in Principle Affect Credit Score

Does a Mortgage in Principle Affect Credit Score

A mortgage in principle – also known as an Agreement in Principle (AIP) or Decision in Principle (DIP) – is often the first step in the homebuying process. It gives you a good idea of how much you might be able to borrow and can make you a more attractive buyer to estate agents and sellers. But many people wonder whether getting a mortgage in principle has any impact on their credit score.

The short answer is that it can, depending on how the lender processes your application. Some lenders run a soft credit check, while others may carry out a hard search – and only the latter can affect your credit score. In this guide, we’ll explain what a mortgage in principle involves, how it works, and what effect – if any – it can have on your credit file.

What Is a Mortgage in Principle

A mortgage in principle is a statement from a lender that says, based on a quick check of your finances, they’re willing to lend you up to a certain amount in principle. It’s not a mortgage offer or a guarantee of approval, but it shows you’re serious about buying and financially viable based on current information.

To get a mortgage in principle, you typically need to provide:

• Your name and address

• Employment and income details

• Information on debts or financial commitments

• Consent for a credit check

It’s free to apply, and you can get one online, through a broker, or directly from a lender. Most are valid for 30 to 90 days and can be renewed if needed.

Who Needs a Mortgage in Principle

Getting a mortgage in principle is useful for:

• First-time buyers who want to understand their borrowing capacity

• Home movers seeking clarity before listing or offering

• Buyers in competitive markets, where sellers prioritise chain-free or pre-approved buyers

• Estate agent viewings, as some agents request proof of affordability before booking viewings

Although not legally required, a mortgage in principle can strengthen your position and help you budget more accurately.

Does a Mortgage in Principle Affect Your Credit Score

Yes, it can – but not always. Whether your score is affected depends on the type of credit check the lender uses.

1. Soft credit search
Most lenders and brokers now use a soft credit check when assessing a mortgage in principle. This check:

• Does not impact your credit score

• Is not visible to other lenders

• Can still provide the lender with enough detail to make a provisional lending decision

Soft searches are ideal if you're shopping around or comparing deals, as they leave no mark on your report.

2. Hard credit search
Some lenders still use a hard credit search for mortgage in principle applications. A hard search:

• Can affect your credit score slightly

• Is visible to other lenders on your report for up to 12 months

• May be viewed negatively if you have several in a short period

If you're not sure which type of check will be used, ask the lender or your broker before applying.

How Much Could Your Credit Score Be Affected

If a hard search is used, your score may dip by a small amount – typically between 5 and 10 points, depending on your credit profile. A single hard search is unlikely to cause long-term harm, especially if your overall credit behaviour is strong.

However, multiple hard searches in quick succession (for example, applying for several AIPs from different lenders) can be seen as a sign of financial desperation and may reduce your score further or trigger rejection from other lenders.

Real-World Example

Holly, 28, applied for a mortgage in principle with two different lenders. One used a soft check, the other used a hard search. The hard check caused her Experian credit score to drop by 8 points. She then applied for a credit card shortly after, and the lender saw the mortgage-related hard search and declined her.

By contrast, Ben used a mortgage broker who sourced three AIPs from high street banks using soft checks. His credit score remained unchanged, and he later proceeded with the most competitive lender.

How Lenders View Mortgage in Principle Applications

Lenders are generally understanding of one or two mortgage-related searches. They know buyers often shop around and that an AIP is part of the process. However, frequent applications or searches from multiple lenders in a short time can cause concern, especially if your credit profile is borderline.

If you later go on to make a full mortgage application, this will involve a hard search regardless – so timing and preparation are key.

Tips to Minimise Credit Score Impact

• Check before applying: Always ask whether the lender will carry out a soft or hard search

• Limit applications: Don’t apply for multiple AIPs with different lenders unless necessary

• Use a broker: A whole-of-market broker can often get multiple AIPs using soft searches

• Monitor your score: Use free tools like ClearScore, Credit Karma or Experian to keep track

• Space out applications: Leave a few weeks between any credit applications if possible

Will Getting a Mortgage in Principle Improve My Credit Score

No – simply obtaining a mortgage in principle will not increase your credit score. It does not count as new credit or a repayment agreement, so it doesn’t contribute positively to your history.

The benefit of a mortgage in principle is practical rather than credit-enhancing – it helps you navigate the property market, set a budget, and appear more credible to sellers.

Final Thought

A mortgage in principle is a useful part of the homebuying process and is unlikely to damage your credit score if managed carefully. Most lenders now use soft searches that don’t leave a mark on your file. But a hard search can cause a minor dip, especially if you apply for several in a short time.

To protect your credit rating while house hunting, always check the type of search used, apply only when necessary, and avoid unnecessary borrowing in the lead-up to a full mortgage application.

Used wisely, a mortgage in principle is a powerful tool — but it’s still worth approaching with care.