5 Ways to Improve your Credit Score
If you’ve had some money troubles in the past, you might think that a mortgage is an unachievable aspiration. Fortunately, that’s not always the case and there are still ways that you could obtain a mortgage and buy your own home.
A history of bad credit can feel like it’s going to hang around your neck forever. But fear not, there are ways that you can improve your credit file and appear as a better proposition for lending to buy your own home.
What is bad credit?
When you borrow money, or take out an agreement to make regular payments, those companies record whether you stick to your agreement or not. Usually every month, they will share that information with credit reference agencies such as Experian and Equifax.
If you’re late or miss a payment for your
- Mobile phone contract
- Car insurance
- White goods rental
- Credit cards
- Personal loans
this will be noted on your credit file. The odd one or two over a period of years isn’t the end of the world. If a pattern forms, this is going to give you a bad credit rating.
When you come to apply for your mortgage, the lender is going to check your credit file. If there’s a history of missed or late payments, or even a record that you have a lot of money owing on loans, you might not get the mortgage deal you want.
1. Check your credit file
The only way you’re going to know what your credit history really looks like, is to actually look at it! For a few pounds you can check out your records with Equifax, Experian, and CallCredit so you know exactly what you’re dealing with.
A lot of the time you might get a lot of information that doesn’t make a lot of sense. If you’re confused you can contact the company you got the information from and ask them to explain it to you.
It’s worth getting your records from all of the agencies because some lenders report to only one or two whilst others will report to and check your records with all of them. Knowing what you’re dealing with is the first step to getting it fixed.
2. Deal with outstanding problems
When you get your credit file, see if there is anything on there that is still outstanding. You might have a loan or credit card that you had forgotten about. Contact the company and find a way to settle it.
Anyone who you owe money to will likely be glad you’re getting in touch to get it fixed. If it feels unmanageable, those you owe money too will come to an arrangement with you to make payments.
Burying your head in the sand isn’t going to help. You will have great difficulty getting a mortgage if you don’t pay off what you’ve borrowed before.
3. Fix any mistakes
Mistakes happen. It’s not the end of the world if there’s an error on your credit file. You just need to contact the company that has reported the missed payment, have them check their record to see that it was indeed and error, and ask them to fix the information with the agencies it’s recorded with.
This might take some effort to do, but it’s worth it. The error must have been made by the company reporting the data. if you’ve made the mistake and messed up your money one month that is still going to have to sit on file.
4. Get on the electoral register
If you’re not yet registered to vote, do it. It’s a simple and painless process with your local council. Be registered at the same address that your bills and bank statements go to so that your potential mortgage company can see everything matches up.
It’s a simple step that a lot of people might not think of. However, it’s free and easy so why not get it done and improve your chances of getting a mortgage?
5. Build a good credit history
Information will only stay on your credit file for six years. This gives you the chance to work your way out of bad credit and into a mortgage. Make sure you stick to your financial commitments. There are apps that can help you budget for your bills and expenses so you don’t miss payments.
Credit cards are available for people who have had credit history problems too. It’s not advisable to use these to actually run up a debt because their interest rates can be shockingly high. However, if you use one for your weekly supermarket shop, or have your Netflix and Spotify subscription on it, and pay off the balance in full every month, your going to have a good history of making regular payments in no time.
Get in touch
If you’re worried about how your credit file might affect your mortgage application get in touch with us. We can talk you through your options and offer you advice about with providers you might be able to work with.