The general rule around your credit score is that the higher it is, the higher the chance you have of your mortgage application being successful. In light of this, you may be wondering what you need to do in order to improve your credit score.
First of all, not everyone is guaranteed to be accepted for a mortgage. This is due to the fact that every lender has built their own credit scoring system which results in an applicant needing to demonstrate various things to a range of providers. Therefore, if your application gets declined by one lender, don’t panic, as there are lots of other mortgage lenders who may be lenient with their criteria.
This is where an expert mortgage advisor can help. They can look at your situation and financial background in order to match you to the most appropriate lender. Here at Coventrymoneyman, we always aim to pair you with the right lender the first time around and work hard in overcoming any obstacles that may occur in your situation.
There are a variety of different credit reference agencies in the UK, such as Experian and Equifax. It would be best if you check as many of these agencies as possible in order to have a good idea of your credit score. As well as this, you may find that one of the agencies could be holding incorrect data which means you can see if there is anything incorrect information and will be able to get it rectified.
Below are some helpful ways when it comes to improve your credit rating.
Running a large number of credit searches can have a negative impact on your score. From a lender’s point of view, they will see this as you’re looking to borrow more money from other places which is something that will not work out in your favour.
Be conscientious when it comes to price comparison websites as they do have a reputation for carrying out discreet credit searches on people. If you are looking to apply for a mortgage in the near future, it would be best to avoid applying for any further credit until your mortgage is underway.
One way to gain lots of points on your credit score is being on the electoral roll as it shows stability which is something a lender favours. It’s important to check all your information like your name is all correct and you’re registered at your current address, not a previous one. You can easily register to be on the electoral roll online.
Going over your maximum limit on a credit card each month can harm your credit score. Therefore, using a credit card and paying off the balance in full each month will demonstrate to a lender that you are good at managing your finances. Keep in mind that maxing out your limit or even worse, exceeding an agreed card limit, will not look good from a lender’s perspective.
A credit score can make it look like you’re living in two places at once, which can be down to a number of things. You may have forgotten to tell one of your credit providers that you have moved to a new house or you may have not spelt your address correctly. This can be an issue if you have lived in a flat as the flat-apartment number can be formatted in many different ways.
Having too many credit cards can also have a negative impact on your score. Therefore, you need to go through the cards and see which ones you don’t use anymore. From this, you will need to get your account closed which can be done by getting in touch with the providers. Initially, this can be a disadvantage, because the credit scorers won’t be able to differentiate whether you close the account or the credit provider. Despite this, it’s a temporary issue that will reap its benefits in the future.
By doing this, you are reducing the risk of falling victim to fraud as you might not be aware that you have lost a card you don’t use often.
In the case where you are financially linked to a family member or ex-partner, their credit actions could also have an impact on your credit score, in particular, if they aren’t the best at handling their money.
The unfortunate case is that you won’t be able to get this financial link removed if the account is still live. In order to detach yourself from this link, you will need to make a request with one of the credit reference agencies. Seeking Specialist Mortgage Advice in Coventry from a mortgage broker can be really beneficial as it can be a challenge removing a family member or an ex-partner, therefore, having an expert by your side to guide you could be the best option.
There is a general argument from consumers that credit scoring is an unfair way for lenders to assess applications. The counter-argument from lenders is that it is much cheaper for them to work this way and computers give more consistent outcomes. Regardless of this, it is the most common method in the industry which is why it’s best that you look at utilising these tips to help you with improving your credit score.
One way to increase your chance of your mortgage application being accepted the first time, send an up to date copy of your credit report to your dedicated mortgage advisor in Coventry beforehand. Your advisor wants to know the ins and outs of your finances and this will help towards making the process more straightforward. Furthermore, there are still some smaller lenders in the industry who do not use credit scores, as opposed to going for the older, manual way, but they will have set rules in terms of the amount of defaults and CCJs they will allow.
Last Edited: 20/10/2022