Have you been declined for credit or a mortgage application? Or not sure what your chances are?
Many customers that visit our mortgage adviser find themselves in a situation where they need to boost their credit score prior to being accepted, so we have decided to put together the short guide below. Follow the steps below to improve your credit score and increase your chances of a successful mortgage application.
Make sure you are registered to vote at your current address
Just by being registered on the electoral roll will give you points to boost your credit score. Lenders use the Electoral Roll (electoral register) to check that you live where you say you do, also for fraud checks. It may take 1-2 months for your credit file to be updated so register at the earliest point you are thinking about taking mortgage advice or applying for a mortgage.
Get yourself registered or update your current address here: http://www.eoni.org.uk/
Do not miss any credit payments or pay late!
If your credit rating is poor or fair then you should be aiming to pay off any outstanding credit. Make sure you make your payments on time and don’t miss or make late payments. Missed and late payments stay on your credit report for at least 6 years. Some lenders may decline your mortgage application because of what has happened in your past.
Try not to have too much credit
If you have more than one credit card that you are using and you are near the credit limits this will reduce your credit score. Try clearing in full one card at a time, this will boost your credit score.
Do not let your credit card balances get too high
Lenders will look at the amount of credit that you have used. They may take this into account when assessing whether you are likely to be able to manage any further credit. If your balances are too close to your credit limits, it can be a sign of financial over-commitment.
Don’t open too many new accounts
Your Credit Score is a reflection of how lenders would score you if you were to apply for a mortgage now. However, too many new accounts can be a sign you are living off credit rather than your income or that you could have too many debts so you should also be aware that new accounts will negatively affect your Credit Score for around 6 months.
Follow all these steps and you will be ready for your mortgage application!
Contact us at The Mortgage Clinic at any stage for mortgage advice, we will review your credit report as part of the planning process and help you put a plan in place to be ready for a mortgage application.