How homebuyers can scare off the credit ghouls

Ben Thompson, Deputy CEO at Mortgage Advice Bureau, shares a few things you can do to change your credit scare into a credit score.

Related topics:  Finance,  credit rating,  Halloween
Property | Reporter
31st October 2023
Poor credit
"To avoid the fright of an application being rejected, it would be worth taking the time to take control and clear your existing debts before applying for a mortgage"
- Ben Thompson - Mortgage Advice Bureau

Getting onto the property ladder is an important goal for many. However, preparation and forward thinking are essential to work towards and reach this accomplishment.

As the cost-of-living crisis continues to bite, eating into people’s everyday spending and personal finances, it’s as important as ever for individuals to be aware of their credit rating - especially if they plan on buying a property in the near, or even distant, future.

Mortgage lenders use credit scores when reviewing mortgage applications to determine how financially responsible an applicant is, and to find any financial skeletons they may have hiding in their closet. They want to be confident that they are lending money to someone who is likely to meet repayments, and therefore, a good credit score can help with mortgage approvals.

How you can clear the cobwebs and improve your credit score

Face the monster and find out your score

The first step is to find out what exactly your credit score is. Whilst this may send a shiver down your spine, there are various services out there that can help you quickly and easily find out your credit score, such as CheckMyFile.

If you find yourself frightened by a bad credit score and are thinking about/are in the process of applying for a mortgage, it’s important that you speak with a mortgage adviser, whose knowledge and expertise can help you face and overcome these fears.

Have an account trail, not a ghost trail

Prove that you have a good history when it comes to managing and being responsible for your finances – the earlier you start doing this, the better. Evidencing your ability to manage credit well and responsibly can help prove your creditworthiness and boost your credit rating.

For example, having a small, arranged overdraft, using a credit card, or repaying your phone/other bills on time can show a good track record of your ability to use and repay credit sensibly.

Unveil your address

Lenders will need to see proof of your name and address to ensure that the property details you have provided are where you live… and not a random haunted house. Anytime you move address, you should register on the electoral roll, and update the address linked to any bills and credit commitments.

As a result, providing your address history and necessary evidence will be a walk in the park and help to keep the credit ghouls away. Being untraceable will only drag you and your credit score down.

Get rid of any debt demons

Any existing debts or outstanding overdue loan payments will be your enemy if you’re looking to take out a mortgage. To avoid the fright of an application being rejected, it would be worth taking the time to take control and clear your existing debts before applying for a mortgage.

Doing so will also help to improve your credit score - it’s not witchcraft! Similarly, take care to avoid getting trapped into a spiral of debt by ensuring that all bills and repayments are paid on time. While it isn’t impossible to get a mortgage with existing debt, it can be trickier.

Correct the boo-boos!

Make sure any information about yourself and your finances is correct and completely free of mistakes. While it’s easy to presume that everything is naturally correct, such “witch-ful” thinking can come back to bite.

Any eerie errors, no matter how small, can have a negative impact on your credit score. If you spot a mistake, take action to contact the appropriate party and correct the information.

If in any doubt about how your credit score could impact your mortgage application, speak to your mortgage adviser. They will be able to recommend the most suitable course of action and tailor their advice to find the right mortgage for your needs.

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