How to build your credit score to secure a mortgage

Applying for a mortgage, especially if you’re a first-time buyer, can be a nerve-wracking process. But one way to reduce the stress and increase your chances of a successful outcome is to build and maintain a healthy credit score before approaching lenders. We’ve outlined some basic steps that you can take to get you on track.

Join the electoral register

This is a quick and easy way to start to build your credit rating and can be done online or by post. Whether you currently live with parents or in shared rented accommodation, or you simply haven’t registered with your electoral office, lenders will need this information to confirm your name and address are correct and up to date.

Set up a bank account

In the unlikely event that you don’t already have a bank account, set one up.  Not only does it show you have an on-going relationship with a bank, but it also helps to demonstrate that you are financially responsible, proves you are a UK resident and can help you manage your money and pay your bills on time.

Get a credit card

Before formally applying for a credit card, undertake a “soft search” to assess whether you are eligible. Unlike a “hard search” which can then be available to all lenders, this will not affect your credit score if you fail to meet the criteria.

If your application is turned down, it’s best not to immediately apply for another card. Multiple applications for credit can infer that you are struggling financially, and this could negatively impact your credit rating.

Protect your credit rating by setting up direct debits to make sure you make all your repayments on time, only use your credit card for things you can afford and keep your borrowings below 30% of your maximum limit.

Take out a small form of credit

This could take the form of a mobile phone contract or a store card and is another way to demonstrate that you are reliable and can make payments on time. Again, set up a direct debit to ensure you are making regular payments.

Manage your household finances

It may sound obvious but paying your utilities and other household bills in full and on time can help boost your credit rating. Also, if you live in a rental property, there are schemes run by CRAs that can arrange for information about your regular rent payments to be added to your credit history.

Monitor your credit account and correct mistakes

Be aware of your credit score and monitor your account regularly. A small mistake like a previous address being incorrect or a major error like a wrongly recorded missed payment can all adversely affect your score. Any error can be reported to the lender directly or contact the Credit Rating Agency who will investigate and come back to you within 28 days to update you on any remedial action being taken.

Contact us today

If you are thinking about applying for a mortgage and need some guidance, contact one of our advisers who can talk you through the choices available, and help you select the right product for your individual needs. Get in touch with us today.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Scroll to Top