Four Things You Need To Know About Mortgages & Credit Score
by Sam Murphy, Managing Director of Mortgage Medics.
It probably won’t surprise you to learn that banks and building societies take a keen interest in the credit rating of prospective borrowers when considering mortgage applications. The way lenders assess us, and specifically our credit profile, has changed dramatically over the last decade. Manual assessment of all elements has diminished, as lenders place ever more reliance on automated processes in pursuit of consistency and efficiency.
At Mortgage Medics our goal is to help get everyone on the property ladder, as cost-effectively as possible, and then get you mortgage free as quickly as possible. Getting the best deal from a lender is crucial, so here are my top 4 tips to get your credit rating looking as good as possible for lenders:
- Keep your address current with creditors
This is nothing new, but it’s crucial. With most of us going paperless it’s easy to forget to update details when we move, especially as we’re used to receiving little or no post. Lenders don’t like finding multiple addresses when they perform a credit check on prospective borrowers, and if the odd bit of post we do still get goes to the wrong address it could lead to missing something important, or leave us exposed to the risk of identity theft.
- The past can come back to haunt you
Don’t take your eye off the ball – slip ups such as a default or county court judgement (CCJ) stay on your credit file for 6 years and will cause you problems with most lenders until they drop off. Missing a couple of mortgage payments can be equally damaging, with most lenders not being very interested in why it happened. Minor blips such as the odd missed payment to a credit card or exceeding your overdraft limit occasionally will be forgotten more quickly, but put these right ASAP and at least a few months before applying for a mortgage or other credit.
- Not all lenders think the same
If you do have some blips on your credit report, even some high-street lenders are willing to budge a bit in certain areas. Defaults from communications providers, low-value CCJs (<£500), sometimes higher value CCJs and defaults over 3 years old, can sometimes be accepted by lenders if the application is otherwise strong. Talk to a whole of market mortgage adviser who knows which lenders will be more accommodating than others.
- Keep an eye on your credit report
There are a number of websites offering free access to your credit report. Personally I use MSE Credit Club because it’s consumer focused and doesn’t try to upsell. It also sends a monthly email with an update on my credit score and offers pointers for improvement.
Whatever your circumstances, if you’d like to have a chat about your mortgage options we’re here to help.