So the time has come for you to finally buy a new home. You’ve raised your deposit, and you’ve found the property of your dreams. You make your way to your lender, ready to secure a home loan that will allow you to buy the property.
Then it happens. The lender rejects your application because your credit score is too low. Now, you have to spend even more time on fixing your credit.
It can happen to the best of us, and it’s a situation that you should try to avoid. Most lenders will take your credit score into account when considering your application, so here are a few tips that will help you boost your score.
Pay off Your Debts
This may be a simple tip, but it’s also the best way to improve your credit score. Your outstanding personal debts will count against you when you’re trying to buy a home. If you have too many, your lender may see you as too much of a risk to give a mortgage to.
As a result, you should focus on clearing your debts as soon as possible. Start with the largest debts, and make the highest monthly payments that you can afford. Getting those paid off early also means you avoid much of the interest that gathers on them.
Furthermore, having a good history of on-time payments will also benefit your credit score.
Get on the Electoral Role
If your name isn’t on the electoral role, you’ll find it much more difficult to get credit. It seems strange, but it’s true.
This is something that you should have done anyway, as it’s illegal to not be on the electoral role if you are of voting age. If you aren’t on the roll, then you need to get that sorted before you start applying for mortgages.
Be Wary of Joint Accounts
Most people buy homes with their partners, but that can actually have an effect on your credit score. If you hold a joint account with somebody who has poor credit, you may find that their score bleeds over into yours.
If that’s the case, you have two options. You can either close the accounts that you hold jointly, or you can work with your partner to help them to clean up their credit history.
Check Your Score Regularly
There are several credit checking services out there that you can use to check your score. These include the likes of Experian and Equifax. Getting hold of your current score through one of these services will show you the issues that you have to focus on.
Be aware that you will usually have to pay a fee to check your credit score. Some services even charge a subscription. However, it’s worth it just so you know where you stand.
Don’t Make Repeated Credit Applications
Every application for credit that you make leaves a mark on your credit score. Too many unsuccessful applications will make other lenders very wary of you.
As a result, it’s best to use an online calculator to find out if you’re eligible for a mortgage. Yes, it won’t be as accurate as applying directly. However, it will give you an idea of whether you’re ready to lodge an application.
