Getting a mortgage today can be stressful and the success of your mortgage application can be determined by your credit history. When you apply for a mortgage you will have to supply payslips, P60s and bank statements to show how much you earn and what your monthly budget might look like. This shows lenders your current financial situation, but to predict how you might behave in the future they will also look at your credit report. Usually, a higher credit score means you’re seen as lower risk (the more points you score, the more chance you have of being accepted for a mortgage, and at better rates).
Here are 5 easy ways to improve your credit score:
1. Pay your bills on time – keep track of bills and payments by setting up direct debits. All bill payments are reviewed for your credit score, from mobile phone contracts to internet subscriptions to gym memberships.
2. Pay off all debts – if you can, try and ensure you have paid off all debts when applying for a mortgage. Not only is this sensible as you will likely be taking out the biggest loan of your life, but debts impact your credit score.
3. Stay put – living in the same home for a while has a positive impact on your credit score. It shows that you’re capable of managing rent and bills and paying them on time.
4. Register on the electoral roll – this confirms your name and address history making it easier for lenders to ‘get to know you’.
5. Check for fraudulent activity – it may be that someone else has applied for credit in your name without your knowledge, or your address has been associated with a bad credit score, so it is important to check any credit score reports to ensure the information is correct.