Improve your credit rating to help secure a mortgage

06 November 2009 / by Rachael Stiles

Consumers who are looking for a mortgage should strengthen their credit rating as much as possible to improve their chances of having their application accepted.

CreditExpert has warned that as mortgages have become a lot harder to come by, consumers should make sure the information on their credit report is accurate and, if they have a less than perfect credit history, to take measures and improve their score.

Mortgages for borrowers with a poor credit history will be especially difficult to secure, as will those who might previously have been able to get a self-certification mortgage, because they are soon to become extinct.

CreditExpert's analysis of the mortgage market shows that there were an estimated 15,000 mortgages available two years ago, compared to 1,670 today, and only those borrowers with large deposits and spotless credit histories can get the best mortgage deals.

As part of the Government's more interventionist stance in the mortgage market in the wake of the recent housing crisis, mortgage providers have restricted their lending to the most reliable borrowers who are least likely to default on their loans.

Consequently, CreditExpert warns that mortgage lenders will be scrutinising potential borrowers' credit histories more closely than ever before approving their application, so prospective borrowers should ensure their credit reports are in order – that their details are correct and that there is no evidence of unauthorised lending, which could suggest ID fraud, CreditExpert urges.

Lenders evaluate how much debt a borrower already has, such as personal loans, credit cards, store cards and overdrafts, and how good the borrower is at keeping up with repayments; but, lenders also evaluate how much credit is available to a borrower, so unused credit cards should be cancelled.

CreditExpert suggests that borrowers clean up their credit history where possible, such as making sure they are on the electoral roll at the current address, and paying bills on time to demonstrate that they are a reliable customer.

Missed payments can leave a black mark on a credit report, and are kept on record for at least 36 months, but where a payment has been missed for a good reason, such as illness, they could ask the credit reference agency to put a note of explanation on their report.

CreditExpert discourages those looking for a mortgage, or any other type of credit, from making multiple applications, as lenders often read this as a sign that they are desperate for a loan and therefore not practicing good financial management, or that they are trying to commit fraud.

Rather than casting a net and seeing if they catch anything, damaging their chances in the process, CreditExpert recommends that mortgage-seekers compare mortgage deals and research the market so that they can target the most appropriate deal for them, for which they are most likely to have their application accepted.

Through CreditExpert, consumers can check their credit report for free during a 30 day trial, and can get their credit score for £5.95 to get an impression of how an application for credit might be received.

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