Taking Care of Your Credit Score Before Applying for a Mortgage

If you are looking to apply for credit, the provider will want to assess your ability to service the credit. This is also true of service providers, such as phone companies, who will want to know whether you are likely to pay your bills or not.

The most common tool used for assessing your ability to repay is your credit rating. This rating is usually a number. If the number is too low, you will not be accepted for credit. If the number is high enough, you will pass that part of the application process. If you want to discuss your credit file, you could contact your mortgage broker. Contact a mortgage broker if you want impartial advice on your credit file and the information within.

The main source of information they will use is your credit file. This file will usually be compiled by a central agency. The file will contain information regarding your financial activities over the last six years or so. This will include information about any credit products you have held, such as loans and mortgages, as well as bank accounts, utility accounts, mobile phone accounts etc.

There might also be some negative information on there such as missed payments or credit defaults. This is the sort of information that credit providers will scrutinise the most when assessing your application. It doesn’t take much for credit to be declined sometimes – even the smallest black mark can cause major problems.

Different companies might assign different credit scores to your file. Although various companies will use the same file to assess your credit worthiness, they will have their own systems in place to create the score that they will use to assess your application. They also have different scorecards and cut-off points when assessing applications. This means that you might be rejected by one lender and accepted by another for a similar product.

As you can probably see, it is paramount to look after your credit file. Allowing blemishes on your file could force you to borrow money from a less reputable lender at a higher interest rate, or could see you denied credit entirely.

The best way to protect your rating is to make sure you pay all your bills on time, every time. Details of late payments can remain on your file for up to six years, even if you make the payment at a later date.

If you have black marks on your credit file you should try to fix them, particularly if they shouldn’t be there at all. Contact the companies that have applied the black marks to your record and get all your payments up to date. Sometimes mistakes enter your file, so you might be able to have them removed.

Some lenders will still accept you for a mortgage if you have black marks on your credit file. Usually non-conforming lenders will still consider your application if your credit file is not perfect.

The major banks are unlikely to lend money under these circumstances, so contact a mortgage broker to find out which non-conforming lenders will consider your case.

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