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credit score for mortgage

With so many problems with the UK economy over recent years, due mainly to the recession, it has become increasing difficult for anyone to gain a mortgage as many lenders have tightened their criteria for borrowing. However despite current credit conditions, the rising cost of renting and low interest rates makes owning your own home an attractive and more affordable option. The problem is securing a mortgage, and getting a good deal on your interest rate. Looking at your credit rating or credit score and understanding how this affects your mortgage application and how to improve it, can work wonders in gaining the right mortgage you need to purchase your home.

The first thing you can do is find out more about your credit score before submitting your application for a mortgage. Spending a few extra months improving your credit rating can be the difference between owning your own home or not. The main credit rating company is Experian and many companies or banks consult Experian to gain a value known as a credit score, which is based upon your credit history, personal details and much more. However it isn’t as straight forward as a simple pass or decline as every company has different guidelines and score people differently based on the information provided by credit companies such as Experian. The product you are applying for also varies as the credit score given by a lender for a credit card is likely to be different if you applied for a mortgage from the same lender. A lot of this is due to risk, and therefore the lender will calculate whether they believe you can maintain payments on your mortgage consistently or how likely it is that your circumstances may change for example.

Going through your credit report is really important, as any inaccuracies can cause a problem in gaining a mortgage. Make sure everything is correct and up to date and if you find anything that isn’t right, contact that lender and request that it be altered to reflect the current situation. Also don’t be tempted to apply to as many lenders as you can and simply hope for the best as this can signal problems financially, making you stand out as a potential risk.

There are a few things you can do to improve your credit rating, such as making sure you are on the electoral role at your address, close any accounts that are unused and request that any links to other people such as an ex-partner, are deleted. There is also an opportunity to add a notice of correction which explains any personal circumstances that could explain any problems with your credit report. Also ensure that you pay your bills on time, as this helps the lender to see you as responsible and credit worthy. Essentially it takes time to build up a good credit report, but it will be worth it in the end, you just have to be patient.

by Cormac Henderson

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