Subbie Tip #1 – How A Credit Score Impacts Your Mortgage

It should come as no surprise that a poor credit rating can hold you back when it comes to getting a CIS mortgage and we’ll go over that today, but what does often surprise people is that having what they think of as a ‘perfect credit history’ can be just as big a problem when it comes to securing a home loan.

Let’s start with that:  I’ve had many conversations with clients that proudly tell me they’ve never had an overdraft, a loan or credit cards.  The reality is that most lenders want to see some history of credit to evidence your ability to manage your finances and make payments in full and on time.  So, unless you’ve got a deposit of at least 15%, if lenders can’t see credit relating to your addresses in the past three years, they may be much less likely to offer you a mortgage. 

If you’re at the other end of the scale and have had lots of credit in the past you may be sitting there feeling pretty happy right now, but it’s not just about having a history; it’s about having a good history.  So, if you’ve got a track record of late or missed payments this may have an equally negative impact on your ability to obtain a mortgage.

Happily, many of my clients can evidence that they manage their finances, including credit responsibly.  If that sums you up, you might think you don’t need to worry about checking your credit rating but, again, that might be a mistake. 

I’ve lost count of the number of times I’ve asked clients to check their file and when they do they’ve been stunned to find fraudulent activity listed; usually in the form of credit cards or loans taken out in their name but that are nothing to do with them.  To make matters worse, they often find that repayments have been late or missed altogether which obviously has a negative impact on their credit score.  Not only can this take time to sort out, in the meantime, lenders tend not to be sympathetic nor give you the benefit of the doubt, so this could delay a mortgage offer.

As well as obvious fraud, the other common problems I see on credit reports are related to mobile phone contracts.  These  usually occur when a contract has been cancelled, either during the cooling off period, or at the renewal anniversary date but the supplier continues to try to take payments against a rightly cancelled Direct Debit.  When payment fails the mobile phone supplier will often register a late or subsequently missed payment.  If this continues for six months they may even register a default and pass the file over to a debt recovery agent.  Situations like this can adversely affect your credit score and, whilst no fault of your own, are incredibly difficult to reverse.

The bottom line is if you’re hoping to get a CIS mortgage, checking your credit file is a vital part of the plan and may be crucial to ensuring you get the home loan and property you want.  The good news is, whatever you find, and whatever your current credit score, I can help you review it and provide advice about how to improve it.

Call me on 08000 306705 or drop me an email to:  david@cismortgage.co.uk

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE