Get on top of your mortgage credit score

It is a clever idea to stay on top of your mortgage credit score at every opportunity, not just when you are applying for a mortgage.

Your credit report is a visual representation of how you have managed your money in the past; how you have managed things like your debts, credit cards, bill payments. Everything you have done that is to do with borrowing money. You report is then summarised with a number, your credit score.

How to check and improve your mortgage credit score

First, did you know that you can get a free copy of your credit report from the credit reference agencies that compile them? Experian, Equifax, and TransUnion.

Since the three agencies do things differently, it might even make sense to get reports from all three, as they might have different definitions of what a ‘good score’ is. For example:

Experian (max score 999): 721+ is a fair score, 881+ is good, 961+ is excellent

Equifax (max score 700): 380+ is fair, 420+ is good, 466+ is excellent

TransUnion (max score 710): 566+ is fair, 604+ is good, 628+ is excellent

Fix mistakes in your report

When you have a copy of your report, now is the time to fix any mistakes. Let’s say, for example, your mobile phone provider says you missed a payment, but you didn’t miss anything. Get them on the phone and ask them to change your records.

In the unlikely event that the company refuses to accept their mistake, you can request free support to resolve the issue. One of the following organisations can help.:

The Financial Ombudsman can help with problems with financial companies and services like banks, loans, and insurance

Ofcom can help with media companies: your phone, internet, or TV

Get on the Voters Roll

The electoral register contains your name and address if you are registered to vote. This is the government’s official list of registered voters in the UK. Mortgage providers will benefit from this information in relation to identity fraud. Your record demonstrates that you are who you claim to be and live where you say you do.

Reduce your debts

Having substantial debts can make mortgage companies think twice about lending you money. Please forgive us for stating the blindingly obvious, but if you have debts, pay them off before applying for a mortgage.

Make sure you pay your bills on time

Reminding yourself about regular payments with direct debit or calendar reminders is a clever idea. If you miss a payment, don’t panic – everyone makes mistakes, and it shouldn’t negatively affect your credit score.

Close any credit and store cards you don’t use

Having a credit card that you use and repay each month is great. However, if you have any credit or store cards that you don’t use, you may want to cancel them. They can be used fraudulently without you noticing, and in all likelihood, they will appear on your report as an old address, which will lead to a complicated address history.

Do not exceed any overdraft limits

Overdrawing your account can count against you.

No Payday loans

Having a lot of payday loans on your report might deter some lenders from lending you substantial amounts of money.

No cash from your credit card

You should only use your bank debit cards at cash machines. You look like you aren’t good with money if you use a credit card at a cash machine. If you do not need those shared accounts, close them.

Check if your credit is linked to someone else’s

Your credit ratings are linked with someone if you have a joint account. If the person has a poor credit rating, it could also affect yours. Close any shared accounts you don’t need.

Try to build up some credit

When it comes to your credit report, never borrowing money is not necessarily a good thing. Lenders want to see proof that you can borrow money and repay it on time.

One way to build credit is by using a credit card regularly and paying off the balance in full every month.

If you have imperfect credit don’t despair

Getting a mortgage with poor credit is possible. Buying a home is likely not to be affected by an occasional missed payment. Your mortgage interest rates might be higher if you have a County Court Judgement (CCJ) on your record.

Only the last six years of your financial activity are shown on your credit report. Therefore, if you build up your credit over time and are patient, you will have a better chance of getting a mortgage.