Don't Lose Your Dream House? Top Tips to Improve Your Credit Report Before Applying for a Mortgage

Don't Lose Your Dream House? Top Tips to Improve Your Credit Report Before Applying for a Mortgage

Are you applying for a mortgage, or hoping to get finance for your dream house? In the current environment, UK banks are very cautious in their lending decisions, meaning you need to have as good a credit history as possible, which is checked through accessing your credit check report. Analysing your credit score, lets you know where you stand, versus the average.

Remember 100% mortgages in 2007? This is a distant dream now, as many first time buyers are restricted to renting, even with a 10%-20% deposit, if your credit file is not in order, you will reduce your chances of being accepted.

If you apply to a lender, and are rejected, too many applications over a short period of time, can also indicate identity fraud. This can slow down or lead to rejection on other applications.

According to Equifax first time buyers for example face challenges if they have little credit history or have missed credit payments, but this also applies to all consumers. Equifax recently commented on the return of 90% and 95% mortgages to the market.

Remember lenders look at risk, and if you are putting down a smaller deposit they will want to see you manage your other credit arrangements responsibly. In the UK there are three main credit reference agencies, Experian, Equifax and Callcredit. Lenders can use any of these, but the largest are Experian and Equifax, so check your credit report with both of them first.

Before the applying for your Mortgage, Top Tips to Improve your chances of success:

1. Get access to your Credit Check Report online from Experian, Equifax or Callcredit, check any mistakes and analyse what your credit history looks like.

2. Ensure you are on the electoral roll at your current address.

3. Close dormant accounts and ensure any current credit agreements are paid on time, use direct debits where possible. Remember your credit report records activity on mortgages, loans, credit cards, bank accounts, mobile phones contracts.

4. Before applying for a mortgage if you have little credit history consider a credit builder credit card and ensure you pay the minimum debt/balance every month for as long as possible before applying, as this builds credit history.

5. Do not use all debt available to you and pay any debt early if possible.

6. Speak to the lender, and find out some key criteria for the product, for example minimum salary thresholds, whether they accept commission or not, and other specific criteria which can have a big impact, on your application success, if you do not fit the bill, do not apply.

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