Tips for maintaining a good credit score
When applying for a mortgage, your credit score is one of the most important measures of your financial health. It tells lenders how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans, as well as your ability to successfully get a mortgage.
However, your credit score can be negatively affected by several factors – your repayment history, any current debt, and even if you are on the electoral register, could all impact your credit score.
When you take out credit, missed payments are recorded on your credit report. This may show lenders that you’re financially stretched, or that you’re having difficulty managing debt, which may negatively affect your chances of applying for credit in the future.
Making your repayments in full and on time can help prove to lenders that you are sensible with your money and can pay back what you borrow, which may also help improve your credit score.
If you already have a significant amount of credit available, for example, if you have multiple credit cards or a large overdraft, lenders may view this as a negative. If you already have access to credit, why would you need to apply for more?
When you apply for credit, it leaves a ‘footprint’ on your credit report. Making too many applications in a short space of time can have a negative impact on your credit score as it might indicate to lenders that you’re having difficulties applying for credit. This may also suggest that you have a poor financial record and affect the success of your application.
A good credit score can help increase your chances of successfully applying for a mortgage or loan. It can also improve your likelihood of being offered lower interest rates for repayments.
A low score may negatively impact your chances of being offered credit.
Either way, if the ‘computer says no’, don’t give up hope as some lenders still do not credit score at all and use a manual/human approach to assess your ability to be offered a mortgage.