The general rule of thumb, whether a first-time buyer, home mover, or budding Buy to Let landlord, is the higher your score, the more likely you are to get accepted for a mortgage.
It is worth noting that lenders have an internal credit score that gets built on the information held on your credit report as well as information within your application. Every mortgage provider follows their credit scoring policy, so just because one high street bank declines you, it doesn’t necessarily follow that they will all say no.
When it comes to which credit reference agency to use, or which one will the lender use, unfortunately, they do not always divulge this information.
In any case, sometimes lenders chop and change between Experian, Equifax, and Call Credit. It is good practice when looking to obtain a mortgage to check multiple credit reference agencies. The reason for this is that information on one agency’s file may differ from that on another.
Until you have registered with one of the credit reference agencies to check your score, the first thing you need to do is stop applying for new items of credit. Be careful, something as simple as comparing car insurance on a price comparison website can register unwanted credit searches.
Lenders will use the electoral roll to carry out identity checks, so this is a crucial step. Ensure that your names spelled correctly and you get registered at your current address, your credit file will show if you are registered or not, you can also check with your council.
Mortgage Lenders like to see some “active credit” so having a credit card that you use regularly and pay it off in full each month can help over time. However, bear in mind that taking out new credit could have a short-term negative impact. Don’t miss payments!
Regularly running close to your limit on your credit card or going over the limit will harm your score. Using too much of your available credit will hurt your credit score.
It is essential that you do not appear to be living in two places at once. In any case, this can happen when you incorrectly enter your dates in and dates out of previous addresses.
It’s worth spending some time double-checking the dates and making sure the formats of the addresses are consistent. However, this is tricky when you have lived in a flat/apartment.
If you have any credit or store cards that you are not using you should cancel these. Please note again that this could have a short-term negative impact on your score.
The systems can’t tell whether it is you or the lender taking this action, but it helps in the long run. Also reduces the chances you’ll fall victim to fraud if they were ever to get stolen.
Ensure that all of your open accounts get registered at your current address and not a previous one.
Your ex-partners could affect yours if you hold joint accounts, a mortgage, or a loan. It is vital to inform the credit reference agencies that you are no longer associated and remove any links.
Love it or hate it credit scoring is here to stay. Also, it will have a significant bearing on whether you will qualify for the mortgage you need. It’s quicker and more consistent for lenders to rely on their systems than their human resources.
Having an up to date copy of your credit report to provide to your mortgage broker will help build up a full picture of your financial situation and help them recommend the most suitable mortgage for your circumstances.