In all of the rush of trying to buy a new home, many first-time buyers may potentially find themselves tripped up by the fact that they have bad credit ratings. In some cases, this will not actually be the fault of the buyer. You may be very good with your money, but if there is no evidence that you are capable of paying bills on time, such as you don’t have a credit card that you use and pay off regularly, you may still find your credit rating is low.
So what do you do in such situations? Here we have compiled a couple of quick tips to help you bolster your credit rating so you can secure a mortgage.
Get a Credit Card
While not always the soundest financial advice, getting a credit card can actually help to boost your credit rating. The key here is ensuring you are able to pay off the credit card at the appropriate times. For best effect, use the card for small transactions and pay them off instantly with money from your bank account. Avoid falling into the trap of only paying the minimum payment each month, as this will cause interest to pile up.
Clear Your Debts
If you have high amounts of debt you will find it difficult to secure a mortgage for a property as lenders will see this collection of debt and possibly consider you unsuitable for the loan. As such, priority should be placed on paying off existing debt. Focus on the largest debts with the highest amount of interest attached to them first. Make a concerted effort to pay off that debt, which may possibly require putting a halt on your savings. This may be frustrating, but it will pay off in the long run with improvements to your credit rating.
Be On The Electoral Register
Strangely, having a presence on the electoral register is seen as a positive in regards to your credit score. This is likely because it proves your citizenship, amongst other factors. Confirm that you are on the electoral register by visiting this site to find out the address of your local register and contacting them. However, it is safe to assume you are on it if you receive mail alerting you of upcoming elections.
Each Lender Has Their Own System
In truth, there is no universal credit score in the United Kingdom. Instead, each potential lender has their own system for working out your credit score based on various internal factors. Your reliability will almost certainly be one, however, you also have to remember that banks are now money-making institutions, for better or worse, so many will also consider your score based on how much money they will make from you and what future products they may be able to sell to you. The key to remember is that rejection from one lender may not mean rejection from another, so make sure you speak to multiple lenders. However, you also need to be wary of shopping around in a short time frame, as many lenders may use this to reject a loan application. It is, in many ways, unfair, but it is currently the nature of the beast.
