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Our Blog

11
Jun

How to Improve Your Credit Score for Getting a Mortgage

Getting a mortgage can be a scary process if it's your first time, or even if it's not. You're going to be committing yourself now to a huge amount of money and will first have to essentially pass a barrage of tests in order to be given the loan in the first place. Your future property and thus your future lifestyle will hinge on this going well, so it can definitely feel like a lot of pressure.

With all that in mind then, you need to do everything you can to try and make your mortgage lower and to improve your chances of being given one. And one of the very best things you can do to accomplish this, is to improve your credit score.

What is a Credit Score?

In case you aren't that familiar with what a credit score actually is, it's essentially a measurement of your financial performance which lenders and service providers can use to get an idea of how able you are to pay your expenses.

In this case then, a mortgage lender is going to look at your credit score, and will then be given a rough idea as to whether or not you're likely to be able to make your repayments on time and in full. This is going to be based primarily on how you have managed to pay back loans previously, so if you have taken out large loans in the past but paid them in full, this will then suggest to your new lender that you will be reliable in doing the same this time around.

A number of things can also damage your credit score however, which include failing to pay bills, missing repayments and bouncing cheques. Even more subtle factors can influence your credit score: for instance if you have previously lived with someone with bad credit then this can actually end up affecting your score negatively today. If your credit score is too bad you'll either pay more for your mortgage rates, or you might struggle to get one at all.

The unfortunate aspect of all this is that a few mistakes you've made in your past can end up haunting you when you come to look for a loan years later. The question is how you can go about improving it again…

Steps to Improve Your Credit Score

The first thing to try and do if you have bad credit is to pay off any outstanding debts. You can do this through loan consolidation, debt restructuring, or just by setting a budget and sticking to it. Once you've done this, it can actually help to then take out more loans (probably in the form of a credit card) so that you can then pay these back on time and regularly thus demonstrating that you are capable of doing so. Take out a credit card, use it for something simple like paying your petrol, and then make sure to pay it off at the end of each month without fail. Over time your score will improve.

It also helps to save money in your various accounts, and if you have lived with other people recently then you might want to get those people removed from your credit score.

Fixing your history can take a little bit of time and be a frustrating process, but if you stick at it it is possible and you will save a lot of money as a result in the long term...

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