We know how stressful it can be trying to get a mortgage, and at times it can seem like climbing Mount Everest! The pandemic also hasn’t made the process any easier for many people, especially those that have lost jobs or were hit financially. BUT, there are ways you can improve your odds and make the process easier and more simple, such as staying on top of your credit report.
You’ll need to be as attractive as possible to all lenders if you want to get the most suitable mortgage deal. We strongly recommend you get to know and understand your credit report before starting the mortgage application process.
You need to convince mortgage lenders that you’ve got the financial discipline required to pay back your mortgage. One way they will investigate this is by analysing and assessing your credit report to find out if you have a good repayment history.
Your credit report lists details from any accounts you’ve had open over the past six years, including:
• Credit cards
• Some utilities
As mortgage brokers, we highly recommend using ‘Check My File’ (Multi-Agency Credit Report | Free for 30 Days | checkmyfile), the UK’s most detailed online credit report. With Check My File, you can see your data from 4 Credit Reference Agencies, as opposed to just 1, get an independent view with your checkmyfile Credit Score and once the mortgage application process is over, it’s really easy to cancel.
If you check your report and it isn’t quite what you expect, please don’t worry, you can change this. One of the most important factors is to make all credit payments on time. This ensures you don’t get any extra charges and lets you avoid having any missed or late payments on your credit report.
Three more things to remember are:
• Avoid applying for credit in the six months before your mortgage application. Each time you apply for credit, a hard search is recorded on your report – too many of these can make it look like you’re overly reliant on credit
• Register to vote, as being on the electoral register helps companies confirm who you are and where you live
• Stay within your credit limits – if possible, keep balances at 25% or less of your limit, as this may help your score.
And don’t forget to check your report is accurate and up-to-date, even a small change in the way your address is noted can affect your credit score.
If you find anything on your credit report that needs correcting – e.g. an address or a payment – get in touch with the lender in question immediately and ask for them to amend it.
That said, it isn’t just about your credit score when obtaining a mortgage. Lenders will want to see if you can afford your mortgage before they lend you the money, and be less of a risk to them. So, as well as looking at your credit history they will look at how much you earn, and how much goes out. Not only credit repayments but regular, fixed costs such as childcare, council tax and other outgoings you have on a monthly basis.
If you can show them that you can afford your monthly mortgage payments even if your life situation changed or if interest rates (and your monthly payments) went up, it may help you get a mortgage even if your credit score isn’t the best.
Click the link below to check your credit report for free:
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