There’s no getting away from the fact that credit scores are important.
Lenders look at your credit score them to help them decide whether to a) lend you money b) how much to lend you, and sometimes c) how much interest to charge so if you can clearly demonstrate you have a good credit score, then you’ll stand a better chance of getting the mortgage deal you want.
There are a few ways to prove you are a trustworthy person, can manage your finances responsibly and are able to repay what you borrow.
1. First things first - check your credit score
Start off by finding out how good or bad your credit score is. There are various companies - Experian, Equifax and Callcredit for example – who can do this for you. They’ll produce a thorough report of all your credit accounts, including your outstanding loans and any missed or late payments over the last six years, as well as any other people who are financially linked to you.
2. Show an account history
Prove you have a good history when it comes to managing your finances. Having a history of bank accounts e.g. a current account, savings accounts, ISAs, credit card etc. will give your mortgage adviser a decent history of your credit to look back through.
3. Declare your address
Lenders will need to see proof of your name and address in order to trust you are who you say you are. Register on the electoral roll and make sure all your bills are registered to your current address. This way, everything is easy to trace back to you and confirms your identity.
4. Use a credit card responsibly
Always try to retain a good amount of available credit. Available credit is the difference between what your outstanding balance is and your total credit limit. If your available credit is low, this would indicate that you’re struggling to keep tabs on your finances.
5. Never withdraw cash from your credit card
This will go against your credit score as it looks like you’re having to make the withdrawal because you have no money left in your own bank account, even if this isn’t the case.
6. Don’t miss repayments
This may sound like an obvious one, but missing payments will have a detrimental effect on your credit score. Despite your hard efforts to do everything else, missing repayments shows that you are incapable of managing your finances and paying your bills on time - which isn’t great if you’re trying to get a mortgage.
7. If you have bad credit, stop applying for more credit
If you know for a fact that you have bad credit - perhaps you’ve been buying things on your credit card for a while and only paying off the minimum interest - then you should stop using your credit card immediately. This will only be detrimental towards your mortgage application and is showing that you cannot be trusted to pay back what you owe.
8. Don’t keep unused cards
Holding on to credit cards that you no longer use not only poses a fraud threat but can also be misleading as to how much available credit you have, so make sure you cancel any accounts you don’t use and cut up the card before throwing it away.
We have a professional Mortgage Adviser based in each of our 9 branches. With access to over 12,000 mortgages from 90 UK lenders, they are ideally placed to look for a mortgage to suit your circumstances, as well as help and guide you through the mortgage process. Simply call one of our 9 branches today to arrange a face-to-face or over the phone appointment.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.