You remember that Top Shop store card you took out when you were 18 which took you 2 years to pay off or the mobile phone contract you didn’t have enough money in your account left to pay after you were hit with £150 roaming charges from calling your friends back in Belfast while on your holiday to Spain? Well those little indiscretions all contribute to your credit score. Read on for some good news…
Taking out a mortgage to buy a house involves borrowing money from a lender and for the lender to approve this loan, they want to know that you are going to be able to pay it back and that you have a good track record – this is where your credit score comes in.
Credit scores take into account years of past behaviour as well as your most recent financial activity. For many this can be worrying as they were not always as responsible and fiscally steady as they are now, but the good news is there are things you can do to improve it.
There are a number of things you can do to improve your credit score. Some are short term, others may take longer. Being aware of the things that can influence your credit score if the key
Pay Bills on Time – it maybe seems obvious but this helps build up a good credit score. Being a responsible borrow shows you can handle debt repayments. One late bill payment can have a negative affect on your credit score. Paying debt off on time should be a priority over putting cash into a savings account.
Credit Cards – Reduce the number of cards you have balances on, keep the balance on your card low and pay off the balance on your card entirely – these will help improve your credit score.
Record when you apply for credit – each time you borrow, your credit score can dip slightly which can last up to a year. Recording when you buy a car with credit or take out a loan, will allow you to schedule your mortgage application when your score will be higher.
Register to Vote – Believe it or not, being registered to vote improves your credit score. This costs nothing to do but has an impact on your credit score. Check out how to register to vote in Northern Ireland here!
If you are still unsure or want to look at your credit score in more detail and what kind of mortgage you could get, get in touch and book an appointment or send us an email.