Building credit history (profile) tips for first time buyers’ is an article to help understand and avoid the common pitfalls with credit. Mark Weymouth – Mortgage Adviser
The process of buying your first home starts earlier than many people think. Every time you apply for credit you are scored and when it comes time to purchase a home your profile will determine if you can obtain a mortgage and the rate you pay.
Here is a quick guide to stay on track.
Building credit history (profile)
One of the things that will impact upon your mortgage more than anything starts years in advance: your credit history. Even if you are not saving for a deposit you should be building and protecting your credit history and score.
A credit score is a number by an external ratings agency that reflects how good or bad a credit risk a particular lender thinks you are. Normally the higher the number the better access to credit providers will give you. (Though it can be a tad more complicated than this).
Register to vote: if you are on the electoral roll it helps build your history.
Set up your bills by Direct Debit and ensure are always cleared.
Try to clear your credit card’s balance each month. Try to clear it as early as possible.
If you are unable to pay a bill on time, contact the provider as soon as possible as they often can arrange a deferred payment.
Things to avoid
The following are big red flags to lenders and can have a major impact on your perceived credit worthiness.
It can be tempting to use a credit card like a debit card and make a cash withdrawal using the cash advance function. But be warned, lenders view this as not being able to manage your finances.
Do not live in your overdraft. If you are consistently overdrawn many lenders will take this as a sign that you have an inability to budget.
Though convenient, the interest charged on these loans can exceed 1,500% APR (Money Advice Service) and mortgage lenders will often take the view that the use of them could impact an ability to repay a much larger loan.
Check your credit score regularly
Credit providers are required to provide you with a copy of their report. The Money Advice service have an up to date list on how to apply with each major provider here.
If you, or a family member, have questions about the home buying process, please contact us on 01823 410044 We are here to help.
Mark is a mortgage and protection adviser with over 30 years industry experience. He founded 1st Financial Group with Phil. His interests include football, reading, cinema, keep fit and spending time with his wife and 3 children.
Building credit history tips for 1st time buyers is an article by Mark Weymouth Director, Mortgage Adviser
1st Financial Group is authorised and regulated by the Financial Conduct Authority.