Your Credit Rating And Your Mortgage
Your credit rating is something that contrary to popular belief you can have some control over. Here’s how and how it might affect your mortgage application.
Take control
First of all you need to know what your credit rating is. There are a number of sites on the internet that will help you find out and enable you to access your credit score with either Experian or Equifax, the two main credit rating agencies in the UK.
Once you have access to your report you can check to make sure that all the information on there is correct and that it reflects a true picture of your credit history. You are able to amend some details or add a note to situations where you think there was a genuine reason you missed a few credit payments: perhaps you were ill and it hasn’t happened before or since. A note next to this instance when it did happen will help make a difference. If you sign up to some of the websites such as Creditexpert.com they will arrange for that new information to be distributed to any companies that you may have approached for a loan in the last six months.
Who me?
If you notice something such as a loan application that you don’t remember making, first search any records you may have to see if you have just forgotten and if you cant find any record of it then it’s possible you may have been the victim of identity theft. Identity theft is a growing crime in this country and involves people pretending to be somebody else and using their details to try to get money from companies. If you spot something like this tell the credit rating agency immediately and they will help you sort it out.
Look again
If you are on the hunt for a good deal on a mortgage make sure you get a quote from the lender before you fill in any application form that is going to mean they have to access your credit history. Every time a company accesses you credit history it is recorded and if you are seen to be applying for a lot of credit (or look as though you are) from different companies it will start ringing alarm bells as it looks as though you are financially desperate.
Always tell truth
Whenever you are filling out an application form always tell the truth about your circumstances if lenders find there is information that has discrepancies in it then it will count against you in any future applications.
Pay in good time
Always pay your bills in good time. This is the fastest way to build up a poor credit rating by paying late or missing payments on credit cards and other loans.
Finally
Avoid companies that call themselves Credit Repair Agencies. These are not the credit rating agencies, they are simply after your money as they do not have the authority to change your credit rating.
What about my Mortgage?
When it comes to applying for your mortgage if your rating is low then you are going to have to pay a higher rate of interest. Over a long period such as 25 years that can amount to thousands of pounds more.
Making changes
If you have tried getting a mortgage but are rejected or offered a mortgage suitable only for those with low credit rating (ie with a high interest level) you may consider trying to improve your rating. You can them apply again in some months for a mortgage that offers lower rates.
In the meantime if you can, it might be worth applying for just a couple of credit cards, (assuming you haven’t already got any) and then start to spend a few hundred pounds on them each month. But repay your spend in full when each statement arrives. This should help improve you credit rating but you must, must, must pay back the card each time. If you get into debt by doing this you will be stumped completely.
This is not intended as advice; it is simply an option that could be available if you wanted to try to improve your credit rating but it is not guaranteed to work. Some people believe that it is a good idea to leave a small balance on the card every so often, so the credit card company can make a little money from them. But again, you must be able to pay off these cards and remain in control of the situation at all times. Do not do this if you think you may not have the discipline it requires.
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