Improve Your Credit Score for a Mortgage
When on the verge of buying a new home, getting credit is a really important factor in that decision. Usually, your credit score is a key indicator of your financial health and it helps lenders decide whether to approve an application or not; therefore having a good credit rating is crucial.
The credit reference agency takes into account all relevant information it holds about you, including the amount of credit you already have, your payment history and your used credit compared to your available credit. The agency calculates the score and makes it available to the lender who then determines if they will accept your credit application.
To improve this score, there are some simple techniques you could use:
- Update your information
Make sure you update your address, contact details, work status, or any other information with all of your credit providers. Any wrong information appearing against your name might affect your credit rating or delay a credit application from being approved.
- Start building a history
Lenders will look into your previous borrowing history and small forms of credit, such as a mobile phone contract, will prove that you are capable of paying bills on time every month. This can increase your chances of being accepted for other forms of credit.
- Take care of existing debt
If you have a lot of existing debt, credit providers will most likely reject your application. Be sure not to miss payments as this can negatively affect your credit score and stay on your report for a number of years.
- Don’t let a partner of flatmate’s score affect yours
If you are financially linked with someone and they have a poor credit history, then that might affect your credit application as lenders like to look at their history as well. It might be a good idea to try and keep your finances separate so you can build and protect your own credit rating.
- Close any unused credit accounts
As well as considering your total existing debt, lenders may look at the amount of credit you have access to. This means it’s a good idea to close any credit accounts you don’t use or need anymore.
