So, you know your credit score and you know you want to buy a house. How can you make your credit score better to impress a lender? Fortunately, there’s a lot you can do:
Clear your debts
While you do need to have used debt to have a decent credit score, you also need to show you can use it responsibly. If you have a lot of outstanding debt, even if it’s just lots of small loans or card balances then do what you can to pay them off. Clearing debt is a great way to improve a credit score.
Close down unused accounts
Do you have several credit cards or store cards for emergencies? Do you keep a large overdraft offering on your account even though you don’t need it anymore? The more debt you have access to the less lenders will want to lend you even more just in case you get into difficulties. Close down any unused accounts immediately.
Get on the electoral roll
No lender cares whether or not you’re politically active but they do need to know that you live where you say you live. Being on the electoral roll is an easy way to prove that and a quick win for your credit score.
Pay on time
By making payments on time, or even paying them early if you can, you prove you’re a sensible borrower.
Use a credit card
As mentioned in the myths section, you can build up your credit score by using a credit card and clearing the debt each month. Just make sure you do pay it off or you’ll pay a high interest rate and may worsen your credit score.
Check your file for mistakes
Sometimes errors happen, don’t let one cost you your mortgage. Check your reports from each of the three credit reference agencies and make sure everything is accurate. If you find a mistake then report it and get it sorted before you apply for a mortgage or any debt.
Check your report
Regularly checking your credit score and file allows you to ensure that your hard repair work is paying off, but it also lets you make sure that an identity thief hasn’t stolen your details and is running up debts in your name. You wouldn’t normally be responsible for a fraudster’s debts, but it could delay a mortgage application while the issue is resolved.
This guide to mortgages was produced in collaboration with L&C Mortgages, the UK’s largest fee free mortgage broker and adviser.