These days, having a decent deposit or equity in your house is only a small part of getting a good deal on your mortgage? It’s a great start but your credit score and the lender’s lending criteria can still put a halt on your application. So how can you be better prepared to avoid these potential stumbling blocks?
Credit scores are important to lenders, they show them how you manage your money
Over the last six years, you’ve been leaving a paper trail of your financial transactions and this provides a wealth of information to lenders who use it to make a decision on whether you’re likely to pay back your loans. Maxing out your credit cards and living on overdrafts can be interpreted as a sign that you’re poor at money management and adversely affect your application. If this sounds like you, then it might be worth checking your credit rating by applying for a basic report, around £2 per month, or take advantage of any free trials that are available from companies like Experian. But don’t worry, even if your rating isn’t as good as you thought, here’s some tips that will start turning things around:
- Request any credit errors on your report to be corrected
- Make regular payments (direct debits), don’t miss any payments and manage your credit in order to obtain a mortgage. Ideally over a 12 months period
- Close any store cards and credit cards that you no longer use
- Try not to max out credit cards and credit limits; use less than 50% of your credit limit
- Use special credit rebuild cards to build your credit rating if it’s poor
- Using your home telephone landline on applications, staying at your current address, bank and with an employer for a long time all add to a healthy credit score.
Every time you apply for credit, it leaves a footprint, so don’t get too click happy for deals and if you’re ever rejected for credit, check your credit report for problems before re-applying for anything else (checks are recorded).
And finally, no one wants to find out that their mortgage application failed due to their ex’s poor credit history. So, it’s important to break the financial association after a split. You can do this by writing to credit agencies and requesting a ‘notice for disassociation.’
Make sure you’re registered to vote or you may as well be invisible
With a general election coming up we’ve been reminded of the importance of registering on the electoral roll. If you’re not, this could be a major deal breaker when it comes to credit checks. To register go to the www.gov.uk website and don’t forget to inform them of any marital name changes too.
Even after all this, some lenders will still not be your perfect match
Every lender has their own checks, these include:
- Your existing debt
- Your outgoings
- Your credit rating
- The amount of money you would like to lend
- How much deposit you have saved
- Your employment and income level
Here at Springtide Capital we can look at all of the above and try to match your circumstances against the lender and deal that is most suitable for you, giving you the best chance of being accepted. Call 020 3040 4400 today.