You may have been looking up house listings and saving up your deposit in your Help to Buy ISA
, but if you haven’t been thinking about your credit score, then you may get a nasty shock when the time comes to get a mortgage in principle, or your mortgage overall.
A credit score allows lenders and banks to assess how trustworthy you seem – they base this on money you have borrowed, and your history of paying it back. After all, a mortgage is usually the biggest amount of money you will borrow, so they need to make sure you have a good credit history.
Sometimes it’s unclear which things will affect your credit rating, and recent research by Moneywise
showed that 55% of their users have never checked their credit score. If you’re one of those people who hasn’t stopped to think about how their credit score might affect their mortgage options, don’t fear – Leeds Building Society
have offered us 5 quick tips to get your credit score working for your mortgage application, not against it:
Pay your bills on time
Keep track of all bills and make sure they’re regularly paid on the agreed date. One way to do this is to set up direct debits for each of your bills, so you won’t need to remind yourself to pay each time. All bill payments are reviewed for your credit score, including internet subscriptions and phone contracts.
Pay off all debts
Try to make sure you’re debt free when it comes to applying for a mortgage. Debts impact your credit score.
Live in one home for an extended period of time
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.
Register on the electoral roll
Lenders use information in your Electoral Roll to confirm your name and address history. Once you’re registered, it may take a while for this information to appear on your credit report, but it usually won’t take longer than a month.
Check for fraudulent activity
If any information on your credit report is incorrect, for example if someone applied for credit in your name without your knowledge, you’ll need to contact the credit reference agency as soon as you can.
If you’re a first time buyer and want more information on credit scores, Leeds Building society have a page just for FTBs
. If you’re starting to get your saving into action, and want to know how you can make the first time buying process as easy as possible, keep an eye out for our January articles – we’ll be helping you get your finances mortgage-ready, telling you what to look out for when you view a home, and answering your first time buyer questions.