How your credit score affects your mortgage – and how to improve it

Property News

These days a person’s credit score is used for all kinds of purposes, including finding a place to live. Many landlords will check it before accepting prospective tenants and mortgage lenders will certainly check it before deciding whether or not to grant a mortgage.

It’s not the only factor they check, but it is a very important one, which can literally make or break an application. With that in mind, here are some tips on how to improve it.

Close off any credit/store cards you no longer use

This is actually a good move from the point of view of protecting your identity as well, since it will reduce the number of companies which keep your data and hence reduce potential points of compromise.

Admittedly it will take time for this to happen, but at least you’ll have set the ball rolling. The reason it matters for your credit score is that it reduces the amount of open credit you have, which looks good to prospective lenders.

On a similar note, if you have small balances on cards or loans, try to clear them off and close the product before applying for a mortgage.

Clean up any outdated financial links with other people

In simple terms, if you have a legally-recognized financial link with another person (like a joint bank account or a loan taken out in both names), then the other person’s financial behaviour will reflect upon you.

Even if this is not an issue at the moment, it makes sense to clean up outdated links just from the perspective of keeping your important records in good order.

Request any inaccurate information be deleted or corrected

Mistakes happen and when they happen on credit scores it can be a major irritation. Get a copy of your credit scores from at least the two biggest credit-reference agencies; Experian and Equifax (and preferably TransUnion as well) and check the details are correct and consistent.

This last point is important, especially when it comes to modern addresses. For example, if you lived in Flat 4F, make sure it’s listed consistently as Flat 4F and not Flat F4, Flat 4-F or any other variation of your address.

If any of your details are incorrect or inconsistent, you can request to have them corrected. (In terms of mistakes, GDPR rules are on your side).

Put your name on the electoral roll at the address you’ll be using for your mortgage application. Even if you have no intention whatsoever of voting, it really does make a difference to your credit score.

If you’re on the electoral roll at an old address, it really is worth making the effort to update your details regardless of the fact that you intend to move.

Refrain from applying for other forms of credit

When you apply for credit, companies perform a search on your record. Some of these searches do not leave any traces (these are called soft searches), but some leave digital footprints which can stay on your record for quite some time and can be off putting to lenders.

Author Bio

Indlu are estate agents in Manchester offering a no sale, no fee estate agency service in the North West and a free online property valuation.

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