In simple terms, the higher your credit score is, the higher the chance you have of your mortgage application being accepted. But how exactly do you improve your credit score?
It’s worth remembering that no one is guaranteed to be accepted for a mortgage. This is because each lender has developed their own credit scoring system over the years, meaning you need to showcase a variety of different things to different providers. With this in mind, don’t worry too much if you fail with one lender as there are other mortgage lenders who may be more forgiving with their criteria.
It is the job of your dedicated Mortgage Advisor to match you to the right lender. The hope is always to get this done first time, though this can vary between case and sometimes it requires a little more work than expected. Both you and your Mortgage Advisor in Coventry want the same thing which is for you to end up with the most appropriate and favourable deal for what you’re looking to do.
There are various different credit reference agencies in the UK, including Experian and Equifax. It would be a smart plan for you to check as many of these agencies as possible to get a better idea of your credit score. Also, there could be a chance that one of the agencies may be holding incorrect data. Checking with several agencies will help you identify anything that is wrong and allow them to be rectified.
There are some good practices listed below regarding things you can work on to improve your credit rating.
Having too many credit searches can have an negative effect on your score. This is because it shows lenders that you’re looking to borrow more money from other places, something they’re not fond of seeing.
Be especially careful when using price comparison websites, because they are major culprits of performing discreet credit searches on people. If you know you want to apply for a mortgage soon, it would be smart to avoid applying for any further credit until your mortgage is underway.
Being on the electoral roll adds a lot of points onto your score as it is a sign of stability, something the lender likes to see. Please make sure that your name is spelt correctly and that it’s your current address you are registered at, not a previous address. If you are not registered, doing so online is very easy.
If you max out your limit on a credit card each month, that will reduce your credit score. Using a credit card and paying off the balance in full each month will indicate to a lender that you are good at managing money, which works in your favour. Remember though, that maxing out your limit or even worse, exceeding an agreed card limit, does not look good to a lender at all.
Sometimes your credit score can make it seem like you’re living in two places at once. This happens if you have forgotten to tell one of your credit providers that you have moved to a new house. Make sure that all addresses are spelt correctly. If you have lived in a flat this can be tricky as the flat/apartment number can be formatted in a variety of ways.
Owning too many credit cards can also have a negative affect your score. If there are any cards you don’t use, contact the providers and get the account closed. In the short term, this can be a downside, as the credit scorers can’t tell if you closed the account or the credit provider. It’s one step back for two steps forward however, and this has benefits in the long run.
This is also a good practice as it reduces your chance of falling victim to fraud as you might not be aware that you have lost a card you don’t use often.
If you have a family member or ex-partner connected to you, their credit actions could also have an affect on your credit score, especially if they’re bad at handling their money.
Unfortunately, you won’t be able to get the financial association removed if the account is still live. To remove one of these links you need to make a request with one of the credit reference agencies. It may be worth receiving Specialist Mortgage Advice in Coventry from a Mortgage Broker as removing a family member or an ex-partner could be a difficult task without someone available to help you through it.
Many consumers feel credit scoring is an unfair way for lenders to assess applications. Lenders see it differently than this, as it is much cheaper for them to operate this way and computers give more consistent outcomes. Either way, this is the most common approach within the industry, so utilising these tips should help put you on the path to improving your credit score.
If you’re looking to increase your chances of your mortgage application being accepted the first time, then send an up to date copy of your credit report to your Mortgage Advisor in advance. The more your advisor knows about your finances the better it is for you and the easier the process may be. Also, there are still some smaller lenders out there that do not use credit scores, instead opting to do it the old-fashioned, manual way, though they will still have certain rules about the number of defaults and CCJs they will allow.