FIRST TIME BUYER? FOUR EASY WAYS TO IMPROVE YOUR CREDIT SCORE

16th March 2024
Home > News > FIRST TIME BUYER? FOUR EASY WAYS TO IMPROVE YOUR CREDIT SCORE

Grantham Property News

When you take out your first mortgage, as with any financial product, you’ll have to go through a credit check. It’s normal to feel apprehensive about this process, as let’s face it, few of us have perfect credit. 

That’s why it’s worth trying to improve your credit score, if possible, in the months before you apply for a mortgage, as a better score can mean lower rates and a wider choice of lenders.

With this in mind, here are four ways you can improve your credit score. We spoke with our fantastic partner mortgage broker Jonathan Saint from 1st Mortgages about the best way to assist and move forward to your first dream home.

 

  1. Get a copy of your credit report

 

There are lots of free and paid for credit report services in the UK, enabling you to access your information. We recommend you go directly to the three main credit reference agencies: Experian, Equifax and Callcredit. When running your credit check, your lender or broker will usually use one or a combination of these services.

Once you have your credit report, check it carefully for errors. It’s important to do this well in advance of applying for your mortgage, as it can take a while for changes to take effect. Some things that could be dragging down your credit rating include:

  • Not being on the electoral register
  • Late or missing bill payments
  • Taking out a lot of credit in comparison to income
  • Being financially linked to someone with bad credit, i.e. an ex-partner

Whilst you can’t erase a bad credit history, you can draw a line under it and become better with money, as well as correcting any mistakes that are bringing down your score. 

Jonathan added, in terms of credit reports I recommend www.checkmyfile.com as it extracts data from main credit reference agencies that most lenders use.

 

  1. Borrow responsibly

 

There’s one thing that can be just as worrying to lenders as a bad credit history, and that’s having no credit history at all. If you live with your parents and have never had a loan, credit card or car payments, then it’s possible you may have barely any credit history. This may seem like a good thing to you, but the reasons why lenders might find this troublesome is that they don’t know if you’re any good at handling money! If you’ve never had to balance a budget and pay off a utility bill every month, then how do they know if you can cope with making mortgage payments?

The simplest solution to this is to borrow small amounts and pay them off monthly, before the interest charges kick in. Get a credit card and use it for your day-to-day expenses, paying it in full each month. This will help you build a credit score. Just be careful not to be tempted to overspend.

 

  1. Don’t max out cards - and do pay more than the monthly minimum

 

When you apply to borrow money, whether it’s a credit card or car finance, you get a credit limit, which is the maximum amount a lender will be willing to lend you. It’s important to realise that this is a limit, not a goal, so never go over it. Try to pay down any credit cards and loans as much as possible before you apply for a mortgage, as having cards close to their limit instantly lowers your score.

You should also make sure you pay more than the minimum each month on credit cards. If you pay the minimum, you’re just paying off the interest, so your debt never really goes down. There are online calculators that you can use to work out how long it will take to pay off your cards, so take a look at what a difference an extra payment of £10 or £20 per month can make to your overall balance. 

 

  1. Pay on time

 

If you’re the type who pays their bills whenever they remember, and regularly misses payments by a few days, then get out of bad financial habits now. Draw up a spreadsheet of your outgoings and which day they are due, and make sure that you pay bills a few days before this to allow the payments time to go through. If making manual payments is a pain, then consider setting up direct debits that debit your account soon after payday, so there’s no excuse to miss any.

 

Getting a better credit score can help you as a first-time buyer, enter the mortgage market. It shows that you’re responsible with money and gives you a better opportunity to see the best mortgage deals. Many first-time buyers only have a small deposit, so may be looking to borrow 90-95% of a property’s value, and to get these kinds of mortgages, you’ll need a great credit rating and no adverse credit on your file. 

 

Jonathan Saint, our fantastic mortgage broker who you could see at our office on London Road also added: I think another key thing to add in there is that even if you have “bad credit” - historic defaults, missed payments and even CCJs it doesn’t automatically mean that you can’t get a mortgage, there should be options regardless - and that’s why it’s important to speak with a broker.

 

Contact the team at Secure My Sale Estate Agents on 01476 825258 for more first-time buyer property advice and to book an appointment with Jonathan.

 

www.securemysale.co.uk


Share this article
  • icon
  • icon

Related News Articles

Property Market Update: What’s Happening In The UK Property Market – October 2022

Mortgage rates, house prices and average rents have hit new highs, while stamp duty has been cut in the government’s mini budget (one of the few changes to remain after Kwasi Karteng’s sacking and the appointment of Jeremy Hunt as the new chancellor), and a property with a place in TV history is on the market! Read on for all this and more in your October property m...

04/11/2022
What’s Happening in the UK Property Market: June 2023

The turbulence in the UK housing market is showing no signs of slowing down, with mortgage rates continuing to rise, which is having a knock-on effect for renters. Read on to find out all the latest UK property market news.   Mortgage Rates Set To Continue Rising   Borrowers are being warned to brace themselves for further increases in mortgage rates over the comi...

01/07/2023
Struggling To Sell? Why Setting The Right Asking Price for your Property Is Vital

Is the price right? Making the leap to sell your house is a big decision, and usually comes after lots of discussions about where to move, why, and what sort of house to buy next. But one key aspect of selling your house, and perhaps one of the most important, is the price. What you get for your home may affect what you can afford next. Getting the price right is absolutely c...

16/09/2022
IS CHRISTMAS A GOOD TIME TO SELL YOUR HOUSE IN GRANTHAM?

Did you know that the festive season can be a wonderful time to sell your house in Grantham. Yes, of course, many people are thinking about presents, Santa, food and drink, but it can also be a great time for you to consider selling your home. Why? Well, we'll explain in just a moment. First though, if you need help deciding whether to sell or if you're looking to buy a prope...

16/12/2023