Before asking a mortgage broker to find you a suitable home loan, it's important that you take steps to ensure that your credit score is as favourable as possible. Without a decent credit rating you might not be considered a 'safe bet' by many mortgage lenders, and you could struggle to obtain the finance you need to buy a house.
Here's some advice on how you can improve your credit rating and give your broker the best possible chance of securing you a good deal.
Financiers check the electoral role as a way of verifying your identity. If you've recently emigrated or have just moved house, your details may not be on the electoral register. Make sure that you register with your local authority so that all your details appear on your credit report.
Correct errors and omissions on your credit report
Obtain a copy of your credit report from one of the main credit reference agencies and check the information contained within it carefully. The simplest of errors or omissions could mean that your mortgage application is turned down. If you discover any incorrect or missing information, contact the credit reference agency immediately as ask them to amend your details.
Distance yourself from others with bad credit
If you have a joint credit card or mortgage with someone who has a poor credit history, this can affect your own credit score. Under these circumstances you are best advised to keep your financial arrangements completely separate so as to avoid being 'tarred with the same brush' as someone who is not viewed by potential lenders as a safe risk.
Cancel unused credit cards
If you have a collection of credit or store cards that you never use, chop them up and throw them away then contact the card issuer and close your accounts. Banks do not like mortgage applicants who hold multiple unused credit cards, even if the balance on them is zero. This is because there is always a risk that you will one day 'max-out' on your cards which could leave you financially overstretched and unable to meet your mortgage repayments.
Observe the rules
Lenders like responsible borrowers who keep their accounts in good order and play by the rules. In other words, don't exceed your agreed credit limits on your credit cards or overdraft, and make your repayments on time and in full.
Keep credit applications to a minimum
Whenever you apply for credit, you leave a 'footprint' on your credit reference report. Multiple applications can make it appear that you've applied for credit over and over again and have been declined; this is a very off-putting picture for would-be lenders.
Mortgage lenders like to see stability in a prospective client's profile. You can achieve this by showing them that you have used the same bank for many years, lived at the same address for a long time, and have been in regular employment since you left the education system.
In these times of economic downturn mortgage lenders are cautious about who they take on as 'risks'. Taking steps to improve your credit rating will make your mortgage broker's task of securing the finance you need to purchase your dream home much easier.