Buying a New Home: How to Maintain a Good Credit Rating
While you might have found your perfect property and have the deposit in the bank, you will not be able to purchase a new home with a poor credit rating. Unfortunately, a poor score can impact your eligibility to borrow money or access products, such as a mortgage or loan.
If you are planning to buy a property in the future, find out how to maintain a good credit rating.
Ensure You’re Registered on the Electoral Roll
It’s unlikely you will be accepted for a mortgage if you do not appear on the electoral roll. Every mortgage applicant must register, or they’ll find it difficult to receive any form of credit in the future. If you have yet to do so, you can register to vote either online or via post.
Pay Your Bills on Time
It’s important to prove to a mortgage lender that you have a firm grasp of your finances. To do so, you must pay your bills on time. As you’re not a homeowner, you might not have the responsibility of any household bills just yet. If so, build up a solid credit history by paying for a mobile, internet and/or landline contract.
Avoid Applying for Many Loans
Running a home can cost a considerable amount of money, as you’ll need to pay for home improvements, furniture, groceries and household bills. For this reason, you might be tempted to apply for a loan to pay for a structural repair or another home improvement project.
However, it’s important not to apply for too many loans, as a lender will perform a credit search against you every time, which can negatively affect your credit rating when applying for a mortgage. Even no credit check loans can impact your score. It, therefore, might be beneficial to visit cashlady.com to secure an FCA regulated loan.
Identify If You’re Linked to Someone Else
If you have a joint account with a partner, family member or friend, it could negatively affect your credit rating if they have a poor score. It’s essential to check you’re not linked to another person, such as an ex-partner, as it could prevent you from securing a mortgage on your dream home.
Eliminate Outstanding Debt
Before you apply for a mortgage, your primary goal should be to eliminate any outstanding debt, which could go against you when applying to a lender. If you have a considerable amount of existing debt, a bank or building society might be hesitant for you to borrow money until you have reduced or cleared it.
You can quickly eliminate outstanding debt by:
- Paying off the most expensive debt first
- Making monthly overpayments
- Consolidating debts with a smaller interest rate
- Selling unwanted items to make additional repayments
Check for Mistakes on Your Credit File
Small credit report mistakes could lead to mortgage rejection. Even a slightly wrong address can negatively affect your credit rating. It’s a wise move to check every detail on your file and immediately correct any inaccurate information before you submit a mortgage application.
To report a mistake, send a challenge to a credit reference agency, who will have 28 days to remove the information or inform you why you’re wrong. If they agree it is a mistake, it will be marked as “disputed,” and the lender will not rely on the information when considering your application.