FAQs

Is your credit rating good enough for a mortgage?

Is your credit rating good enough for a mortgage?

The general rule of thumb is the higher your score the more likely you are to be accepted for a mortgage. It is worth noting that lenders have an internal credit score which is built on information held on your credit report as well as information within your application. Every mortgage provider follows their own 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 and 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 agencies file may differ to that on another.

Here are our top tips for things you can do right away to improve your credit rating:

Stop Unnecessary Credit Searches

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.

Are You on The Voters Roll?

Lenders will use the electoral roll to carry out identity checks, so this is a very important step. Ensure that your name is spelt correctly and you are registered at your current address, your credit file will show if you are registered or not, you can also check with your local council.

Active Credit

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!

Don’t Run Close To Your Maximum Limit

Regularly running close to your limit on your credit card or going over the limit will have a negative effect on your score.  This should be avoided. Using too much of your available credit will hurt your credit score.

Check Your Address History Is Keyed Correctly

It is really important that you do not appear to be living in two places at once. 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. This is tricky when you have lived in a flat/apartment.

Close Any Unused Credit Accounts

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 be stolen.

Check Your Account Addresses Are Correct

Ensure that all of your open accounts are registered at your current address and not a previous one.

Remove Any Previous Financial Links

Your ex-partners score could have an effect on yours if you hold joint accounts, a mortgage or loan. It is important 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 major bearing on whether you will qualify 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 local mortgage broker will help build up a full picture of your financial situation and help them recommend the most suitable mortgage for your individual circumstances.

Malcolm Davidson
Mortgage Broker in Manchester
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