If you have a poor credit rating, you may be a bit worried about applying for a mortgage for your dream property. The fact is that lenders will always make it a point to check applicants’ credit ratings and histories, and if your history or rating is less-than-satisfactory, you could find it more difficult to get mortgage approval. But before giving up on your dream, you should know that there are ways through which you can improve and enhance your credit rating when applying for a mortgage. So, what can you do to get a better credit rating? Let’s find out.
- Build it up
Some individuals may not even have a credit rating to speak of, as they have never incurred debt before. Whilst you may think this is good, not many lenders will agree with you. This is because lenders want to see that you have debt and have been able to manage this debt properly. Lenders who cannot see any credit history will have a more difficult time determining if you will be a good borrower or not. In order to build up a good history, you should take out a credit card and use it – whilst making sure that you make your payments every month.
- Be prompt with your payments
If you don’t have a good rating due to missed or late payments, it may be a good time to be more prompt with your payments. In order for you not to miss payments or make delayed payments, it would be a good idea to go for direct debit, so your payments can simply be automatically deducted from your account. You just have to make sure, of course, that you have enough funds in your bank account, so it can cover your payments, as an experienced mortgage advisor from mortgage-wise.co.uk would recommend.
- Stay within your limits
If you regularly use a credit card for purchases, it comes with a limit – a maximum amount which you owe to your credit card provider at any time. If you exceed the limit, you will be charged a £12 fee, which is not only bad for your credit rating but bad for your finances as well.
- Make sure your data is correct and updated
You should also make sure that your data and information on your credit record is correct and updated, especially if you have had debts in the past. Whatever data you have on your credit record should match the data you have on your mortgage application form. In particular, make sure your address is correct, closed accounts are updated, and you are not financially connected to anyone you are no longer dealing with.