Buying your own home is one of the biggest purchases and potentially biggest investments that you will ever make. In order to buy your home, it is likely that you, like most people, will need a mortgage to do so. The way in which a mortgage lender will grant mortgages, the prerequisites, and the requirements have changed over recent years. Typically, lenders are now more stringent and carry out greater due diligence when it comes to lending. That said, there are steps you can take to make your application for a mortgage more attractive to lenders. Read on to find some of the best tips.
Know your credit score
Everybody has a credit report, this gives a detailed report of your credit history and the report produces a score. This score will help a lender decide whether you consider your application to be a safe loan. You can request sight of your credit score online via providers such as Equifax to determine the scope you have in terms of borrowing large sums of money for a mortgage. The higher the score the better, that said, if you have a low credit rating just knowing this information will be invaluable as there are steps you can take to improve your score.
Improve your credit score
Even if you have a good credit score, chances are there are still things you can do to improve it to give you the most advantageous terms when it comes to obtaining a mortgage. Here are some of the things you can do to improve your credit score;
- Firstly, do not presume that everything is correct. Examine your report and ensure all of the information is current and correct. E.g look out for any debts that are marked as unpaid but are actually paid or incorrect identity information.
- Prove where you live by registering on the electoral roll at your current address.
- Build a credit history. If you do not have a credit history it will be difficult for the report to give you a score, which can be a common problem for younger people buying their first property. You can start to build up a credit history by making regular payments on time and in full, such as phone bills, insurances, memberships, etc. This will show that you are capable of meeting your financial responsibilities and are less likely to run the risk of incurring debt to make payments.
- Credit cards. When it comes to your credit score a credit card can be a useful tool but if used incorrectly it could be your downfall. By using credit and paying off any debt on time and in full, your credit rating will benefit exponentially. However, if you are using credit you should do so mindfully. Ensure that you do not use more than 50% of your credit limit, as this will be viewed favorably by lenders, and of course always ensure that your balance is paid. Failure to do so will not only be a red flag for lenders but it could have very serious consequences for you.
Be safe out there.
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