The importance of a good credit rating
While there are some great mortgage rates around, they are typically only accessible for those with the very best credit ratings.
And while any credit issues from years ago won’t stop you from getting a mortgage, they could prevent you from getting the best deals, costing you hundreds, or even thousands, of pounds a year in extra interest.
Many people don’t realise that defaults (when a company cancels your agreement with them because you have missed payments) stay on your credit file for six years from the date of default, even if you pay off the debt in full. These don’t have to be for huge sums either, they can stay on your file even for a few pounds.
Lenders have different criteria when looking at credit history – some disregard anything under £100 and more than 3 years ago, but others are much more stringent.
Lenders will also be assessing your credit score – this is a measure of how likely you are to make payments on time. If you have never had a loan or credit card your score will be low, as there is no evidence you can achieve this.
Tips for improving your credit rating:
- First time buyers should check their credit rating with the main credit reference agencies and check all their information is accurate
- Any people connected to you on your credit report that are no longer valid should be removed (for example if you are now divorced)
- If you have had any defaults, complete a ‘notice of correction’ to explain the reasons, such as unemployment or ill health
- Make sure you are registered on the electoral roll at your current address as this be reviewed to confirm you are who you say you are
If you would like any advice on securing the best mortgage deal for you, please call smarthomes’ mortgage advisor Louise Lewis on 0121 744 4144 (option 2). To find out more about smarthomes’ mortgage service: