As part of our How to Buy series, this blog from the Mortgage Bureau looks at your credit score and what you can do to improve it when buying a new home.
When applying for a mortgage, lenders use your credit score to analyse the risk and determine how likely you are to repay the amount you borrow, including interest.
It is calculated using answers from your mortgage application (points are allocated to certain questions throughout) and your payment history for existing loans, credit cards or hire purchases. If you pay off any other financial commitments in full and on time you’re more likely to have a higher credit score, than if you miss or are late with your payments as you are demonstrating a responsible attitude towards debt to a lender.
You can check your credit score for free with Experian. Just remember, all lenders have different criteria and set their credit score pass rate accordingly, so a high credit score from Experian does not automatically mean a high score with a lender. Particularly given your deposit will also affect your credit score with a lender, as generally the greater the deposit the lower the score you need to pass.
Here’s five top tips to improve your credit score and help get the most suitable mortgage for you:
1. Make sure all your credit information is correct, as a wrong address can change the way your payment history is reflected to a lender.
2. If there is anything that is incorrect, you can request a Notice of Correction as long as you can provide the necessary evidence.
3. Look at the credit score of anyone you share a linked account with and make sure you aren’t financially associated to anyone with poor credit.
4. Make sure you’re registered on the electoral roll at your current address, you can register to vote online here.
5. Avoid too many searches on your credit file, especially with comparison websites as they search individually with service providers which can lead to multiple ‘footprints’ and impact your score for up to three months. Instead, let your Financial Adviser do the searching for you!
If you want to know more, speak to a member of our Sales Team in the Sales and Marketing Suite at your local development and they’ll be happy to help by putting you in touch with one of our Independent Financial Advisors.