If you’re starting the house hunt, something that may well be on your mind is your credit rating. It’s a key consideration for lenders when granting mortgages and often influences their final decision.
In the UK, there are three credit reference agencies which determine your rating: Experian, Equifax and Callcredit. As they are independent, the score they provide is likely to vary but you don’t need to worry about this as long as the information they have is accurate.
If you are concerned about your credit score, here are a few actionable steps you can take to help improve it before applying for finance.
Check your credit rating first
Before applying for credit, check your rating. Even if you don’t have any concerns, it’s worth looking over your file to ensure there has been no fraudulent activity and that all of your details are correct. Here’s a handy guide on how to check yours.
Clear up any inconsistencies or errors
If you spot any information that’s incorrect, be sure to amend it. If left, this could negatively impact your chances of being granted finance, so it’s important that you get it sorted asap. To do this, simply contact the reference agency you’ve used to check your score and make them aware of the errors that need to be resolved.
Make sure you’re on the electoral roll
Not the most obvious one, but this can, in fact, have a positive impact on your credit score. It’s used as a tool for potential lenders to check you are who you say you are and live in the address provided. If you’ve moved around a bit, be sure to check that you are listed at your current address before applying for credit.
Be wary of using too many credit cards
Even if you pay all of your cards off on time, some lenders can be cautious of people with access to too much credit. If you can’t think of any other reason why your rating isn’t great, it could be worth cancelling some of the cards you don’t use.
Use an app
There are now a number of apps which can help you to track and improve your credit score. Here’s a handy round-up of some of the more popular ones. Just always be sure to check they are 100% legitimate as your financial information should never be shared with any third parties you are unsure of.
Make all payments on time
This seems like an obvious one, but it’s surprisingly easy to get caught out. Sign up for a new membership, streaming service or subscription box - forget about the payment and you could easily accumulate a negative rating. Set up payment reminders or make a clear note of when any direct debits and standing orders are set to leave your account so you can make doubly sure that you have the funds available.
Reduce the amount of debt you owe
This may not always be easy, but it’s the most satisfying way to improve your credit rating. Try to resist using credit cards as much as possible and assess any debts you have. It’s worth reviewing your monthly outgoings to see if there’s any way to increase your loan repayments without overstretching your budget. Simple cutbacks can sometimes make all the difference.
If you’re planning to buy or sell in the near future and would like some further advice, we’d be happy to help. Call us on 10925 499599 or pop in for a chat.
