Ensuring your credit rating is in order before setting out to buy your first home is an absolute must. Along with determining whether or not you will be accepted for a mortgage in the first place, your credit score will also determine the interest rates and general value for money you can expect. Lenders these days are extremely meticulous when it comes to whom they will and will not do business with you can rest assured they will go through your credit report with a fine tooth comb.
So if you’d prefer to land the best possible deal and step confidently onto the property ladder, here’s a quick overview of just a few important tips for giving your credit score a helping hand.
1. Face the Facts
First of all, you will gain nothing by carrying on burying your head in the sand – you need to see how bad the damage really is. After all, there’s a good chance things might not be quite as grim as you expect them to be. These days, there are plenty of options out there when it comes to checking your credit score – the most popular being Experian, Equifax and CallCredit. It’s not until you know how your credit score looks that you can realistically do anything about it, so step one is to see exactly what’s going on behind the scenes.
2. Look for Mistakes
When you have your credit report in front of you, it is of the utmost importance that you ensure there are no mistakes or oversights. If there is anything there that you do not recognise or agree with, it is in your best interests to contact the respective service provider as quickly as possible and ensure the problem is addressed. Mistakes are surprisingly common when it comes to credit reports and can in the majority of instances be corrected relatively easily. It may also be necessary to contact each of the three credit agencies listed above, just to ensure they are all made aware of the oversight and its correction.
3. Joint Accounts
If you currently have any joint accounts with any other person for any reason whatsoever, it is important that you consider their status. The reason being that lenders may choose to investigate the relationships you have with those you share accounts with, which could even lead to them checking the credit reports of those with whom you share accounts. While the credit scores of others will never directly affect your own credit rating, they may affect the decisions made by the lenders you file applications with.
4. Be Careful with Applications
In the months running up to your mortgage application, it’s important to be careful with regard to any other applications you make in the meantime. The reason being that every application you make will show up on your credit report, while repeat examples of denial of credit will also be registered. As such, unless you are 100% convinced it will be accepted and it is a service you need, it is advisable to hold off for the time being at least.
5. Pay Off Balances
Last but not least, if you have any credit cards that you have been holding onto for a long time, consider spending a while before your mortgage application reducing their respective balances. Lenders love to see responsible long-term relationships with financial service providers, not to mention balances that are kept under control. Contrary to popular belief, closing your credit card accounts and cutting up the cards for good will rarely do you any real favours.
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