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Getting Mortgage Ready & Your Credit Score

Your credit score is very important for your mortgage application. There are a number of factors that affect your credit score and therefore your ability to get a mortgage.

Your credit score is very important for your mortgage application. There are a number of factors that affect your credit score and therefore your ability to get a mortgage.

Registering on the electoral role
This is perhaps the easiest and quickest way to increase your credit profile when you apply for a mortgage. If you are not registered on the electoral roll to vote at your current address, it is very easy to do. All you need to do is visit the website of your local authority, register to vote, and you can opt to register on the Electoral Roll. It usually takes around 2 weeks for your local authority to process your registration.

Stay out of your overdraft

Many people use their overdraft like a credit card; try to avoid doing so for at least 3 months, if not 6 months, before you apply for a mortgage. If you are close to your overdraft limit, lenders may have valid concerns that you can’t afford the mortgage payments and that you are out of your depth.

Do not apply for credit shortly before you make your mortgage application

If you have already done so, it’s not the end of the world, but try to avoid applying for any new loans, credit cards, or hire purchase agreements in the three months before you make a mortgage application, possibly up to 6 months in advance. Not only may it impact how much you can borrow if you have additional borrowing which you haven’t factored into your monthly outgoings, but it also may reduce your credit score if applying for credit recently before applying for a mortgage. It is also strong advice not to apply for any new credit in between getting your mortgage issued and completing on the new mortgage, be it for a purchase or a remortgage. A lender has the right to run a new credit check on you at any point throughout your mortgage application up until completion. If they see you apply for a new loan after you’ve received a mortgage offer, that could reduce the amount they can lend you, which could severely impact your ability to get a mortgage if it is no longer affordable to you

Manage your payments and spending

If you have an existing credit card or loan, make sure your payments are on time. Do not miss any payments. Any recently missed payments will have a severe impact on your mortgage application. Missed or defaulted payments may result in either a default being registered against you or even a county court judgment, which has a severe impact on your ability to get a mortgage for a couple of years. Avoid any payday loans, as they are a red flag for high street lenders. You will be severely limited in terms of which lenders you can choose from when you apply for a new mortgage if you have a payday loan against you. Don’t forget to consider other costs with your mortgage, such as stamp duty, conveyancing fees, and even moving fees. Speak to a broker for an estimate of your costs if you are buying a new property. For remortgages, generally, you’re looking at arrangement fees, sometimes a valuation fee, but there is no moving fee so the costs are a lot lower.

Check your credit report before applying for a mortgage

This is vitally important, especially if you are a first-time buyer. You may have something on your credit profile showing a blip against you which could severely impact the application you make for a new mortgage. Lenders want to see that you can borrow money and pay it back on time. Therefore, they use credit reports to view your history of repaying anything from mobile phone bills to loans, credit cards, and car agreements. They even look at utility bill payments to ensure they are paid on time. There are 3 separate credit agencies that lenders in the UK use: Experian, Equifax, and TransUnion. Generally speaking, most lenders use Experian, but any combination of the three can be used by a lender, so make sure you check your credit report before you apply for a mortgage. If any information is incorrect on the credit report, you can speak to the credit reference agency and get any disputes corrected by going through the right channels.

People who are linked to you can effect your credit report too

People who are linked to you can affect your credit report too If you have any previous housemates or ex-partners, you may be financially associated with them, and if they have bad credit, showing at the same address as you, then that will most likely reflect on you too. The best advice is to check your credit report and, if necessary, take steps to disassociate yourself from them.

At Lucra Mortgages, we provide expert advice, guiding you smoothly through the mortgage process. Our team of experienced advisors is dedicated to finding the most competitive rates, tailored to your unique financial needs, ensuring the entire process is as stress-free as possible. Why wait? Contact us today at 01225 970 830 for a free consultation.

By Ben Tadd