15 Mar How to improve credit score – top tips from your London Mortgage broker
Accessibility to mortgage products is quite hard right now (is this a secret – no!). One fundamental ingredient to a successful application is your credit score.
Having a good credit rating can tip the scales back into your favour when asking a bank for finance.
What advise would a top London mortgage broker give? Here are the Just Us top tips to make sure your credit report is as strong as it can be:
London mortgage broker advises:
1) Make sure you’re on the council tax bill and registered on the electoral roll. These two databases are the fundamental systems lenders will use to find you on the credit scoring system.
2) Longevity and stability. Evidence of stability, such as time with employer and your address history will all have a positive impact. Moving every 6 months will make it harder for the credit scoring system to catch up, locate and quantify your credit score.
3) Credit Card Usage. Your credit card usage and balances are important too. Being able to use and clear your credit card every month is always best (from a credit report aspect). Having a balance on your card for a number of months whilst just repaying the minimum amount can damage your credit score. Having a balance constantly near the limit of the card will also hurt your score.
4) Too much available Credit. I know it sounds silly but banks are now more aware than ever of revolving debt. Have 4 credit cards with available limits of £5k and the underwriters can be concerned by the possibility that in 1 afternoon you can have £20k of unsecured debt if you went on a mad spending spree. If you haven’t used a card in a long time and you never go above 50% of the available limit, contact the provider and ask them to reduce the limit.
5) Don’t be scared to use a credit card. Your Mother always said to avoid getting into debt and she was right. However a bit of judicious card borrowing can help. Put the weekly shop on the card and clear it each month. Showing historical financial control of a bank credit line will boost your credit rating. Even requesting an authorised overdraft facility of £150 will show the mortgage providers that another bank has the confidence to offer you a credit line.
6) NEVER miss a payment. Even one missed credit card payment can affect your credit score and give the underwriter a reason not to agree the mortgage loan.
7) Do NOT adopt the battering ram approach if you have been turned down for credit. Multiple applications and multiple rejections will have a negative result on your credit report. If you have been declined you need to seek advice to find out why.
8) Get your name on the utility Bills. Credit reference agencies are starting to link up with utility companies so that they can get a better picture of consumers’ track record on bill-paying as well as loan repayment.
Two further things that you might not know. Firstly credit agencies can now see your monthly salary hitting your account. The banks are telling them and they are sharing that information. If you think Big Brother is watching – you are right. They know a lot more than they are letting on.
Lastly – it’s best to get your credit sorted in advance. It can take weeks and months for errors to be corrected. Old issues need to be resolved in advance – or a lot of frustration lies ahead as you see your dream property hit the market – but you’ve got some silly issue to resolve and the credit agency doesn’t update until middle of next month. In the meantime the Bank is saying NO to your loan application. BORING!!
Hope this helps!
No Comments