Top tips for improving your credit score

Updated: Oct 24, 2021

1) Obtain your Credit report

If not already done so, register with Experian for your free credit score report. This will give you an idea of what the lender will see when they do a credit check.

2) Report any errors on your credit report

Look through the report and if there is anything wrong contact the credit agency and ask for the information to be corrected. You will find guidance on how to do this on your credit agency site.

3) Register to Vote

Check that you are on the electoral roll and the details held are correct. Lenders need to confirm your address and be able to track your credit history. Be prepared to provide addresses for the last 3 years.

4) Apply for only essential credit

Each time you apply for credit, the lender leaves what is called a footprint on your credit score. Too many footprints could put off a new lender as they may think you rely on credit and cannot afford to pay a mortgage.

5) Apply for financing only from reputable lenders

Applying for short payday loans might have a negative impact on your ability to get a mortgage. Lenders may doubt your ability manage your money and to repay your mortgage if they believe you are uncreditworthy or have a poor financial situation.

6) Work out how much debt in comparison to income

Lenders prefer smaller amounts of income being spent on debt repayment, as this indicates that you are able to manage your finances well and do not rely on credit.

7) Avoid taking out loans that aren't essential

A good rule of thumb is to stay away from taking on more debt than you can afford to repay. Aim to keep your debt-to-income ratio as low as possible in the six months prior to applying for a mortgage.

8) However, continue to use your credit cards

Although we have just said stay away from credit, continuing to use credit cards and making regular repayments shows that you are dependable when it comes to making repayments. Make sure that you can repay what you spend on credit cards to show the lender that you are sensible with credit.

9) Close any old unused accounts

any old store or credit facilities you still have against your name that you do not use should be closed so the lenders do not think that you have excessive credit facilities available to you.

10) Ensure you make monthly payments on time

Above all else, make the payments to credit cards and loans on time. Missed payments can have a dramatic negative effect on your credit score in the eyes of the lender.

It worth noting that if you are getting a mortgage with someone else, they will have their finances scrutinised too. It would be worth passing these tips to them as well.

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