Posted 27/11/2024
Applying for a mortgage can be a lot of work. There are documents to collect, a mortgage broker to talk to and decision to make on the recommended deal and term. For many people a mortgage will be the biggest loan they’ll ever get and the mortgage lenders want to know that the debt will be paid back. Lenders use your credit report to get information on how reliable you have been at paying back debts in the past. Your payslips and bank statements show the mortgage lender your present financial position but to predict how you might behave in the future they’ll also look at your credit report.
Some introductory rates are only available to those whose credit history meets certain criteria. So, it stands to reason that if a mortgage lender can’t see any credit history on your credit file, there’s a fair chance it will make things harder. If lenders have nothing to go on, they can’t be sure you’re a responsible borrower and that you’ll pay back the money they lend.
A good credit score could indicate that you’re good at managing money and you’re financially stable whereas a poor credit score could imply the opposite.
There are a number of things that can affect your credit score. Maintaining good credit is important and there are a few points to help you do this:-
Making payments on time – missing payments on a mortgage, loan, credit card or utility bill can reflect poorly on a credit score and can stay on the record for 6 years or more.
Settling outstanding debts – debts close to or at their maximum limit on credit cards can restrict lender options as it may suggest that you’re regularly spending beyond your means. Using a large portion of your available credit could suggest that you’re already financially stretched.
Limiting credit applications – credit applications leave a footprint on your credit report. Too many in a short period of time could negatively affect your score and impact your lender options.
Avoid cash withdrawals & Payday loans – withdrawing cash or cash advances from a credit card will be listed on your credit file. This could indicate to lenders that you have poor money management.
Registering to vote – lenders can use the electoral roll to verify a person’s identity as an independent source that you live at the address used on your application.
Keeping your credit reports in order – checking your credit report monthly to ensure the information is correct can be beneficial before applying for credit and means you can pick up and correct any mistakes.
Considering a personal sick pay policy could help protect your credit score so that if you’re signed off sick from work, you can continue to keep your credit score in good health – even if you aren’t.
For details on how to access your credit file, your personal sick pay options or any part of this topic please get in touch for an informal chat.
