Is your credit score holding you back?
If you’re seeking a loan – particularly something as significant as a mortgage – your personal credit score can be the difference between success or failure.
Far from being out of your hands, you can take meaningful action to ensure your credit score works in your favour.
Tougher criteria
The criteria borrowers are being asked to meet remains much stricter than it was before the credit crunch. Lenders are now fully responsible for assessing whether you can afford the loan, and they are required to verify your income.*
Maximising your credit score can not only affect which deals are available to you, it can be the difference between having a loan request accepted or refused.
How can you influence your credit score?
- Think carefully before you apply for a loan. The more applications you submit, the more ‘footprints’ there will be on your credit record. This could indicate that you are finding accessing a loan difficult and it could be held against you.
- Do your utmost to pay off your credit card bills in full every month, or at least ensure you are making consistent payments from the balance. If you have a record of being able to manage your borrowing responsibly, it will hold you in good stead with lenders.
- Avoid going up to your limit on your credit cards. It may instead be advisable to have more than one card, but you should remain well within your limits on each.
- Make sure you are on the electoral roll. If you’re not, many lenders simply won’t deal with you.
- Get up to speed with your personal admin and avoid missing payments. Irrespective of whether it’s a credit card, personal loan, mortgage payment or utility bill, any missed payments will impact on your credit score.
These steps should help you maximise your chances of accessing a broader range of mortgage deals.
Not sure where you stand?
If you’re worried about your score, why not take advantage of a free 30-day trial from Experian or Equifax, and get a credit report? This will help you better understand your position before trying to get a mortgage.
*FCA Mortgage Market Review published 12 September 2014 –
http://www.fca.org.uk/firms/firmtypes/mortgagebrokersandhomefinancelenders/mortgagemarketreview
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