Your credit score is one of the most important factors in mortgage approval. Lenders use credit scores to determine the likelihood of a borrower defaulting on a loan. The higher the credit score, the lower the risk to the lender. That means you’re more likely to get approved for a mortgage with a high credit score.
A good credit score is essential for getting the best mortgage rate. Mortgage rates are based on credit score, among other factors. A higher credit score means a lower interest rate, which could save you thousands of dollars over the life of the loan.
How to Improve Your Credit Score for a Mortgage
So, if you’re planning on applying for a mortgage in the near future, it’s important to take steps to improve your credit score. Here are a few tips to help you do just that:
1. Check Your Credit Report for Errors
Before you can improve your credit score, you need to know what it is. You can get a 30 day free trial copy of your credit report from checkmyfile then £14.99 per month – you can cancel online anytime. Review your report carefully, and dispute any errors you find.
2. Make Your Payments on Time
One of the biggest factors that affect your credit score is your payment history. So, you should make all of your payments on time. Set up auto-payments if you’re having trouble remembering to make your payments.
3. Use Credit Cards Responsibly
If you use credit cards, keep your balances below 30% of your credit limits. If you’re using a lot of your available credit, that can hurt your credit score. Also, avoid closing unused credit card accounts. That can hurt your credit score as well.
4. Use a Mix of Different Types of Credit
A mix of different types of credit is important for maintaining a good credit score. If you only have credit cards, that’s a good start. But you can improve your credit score by adding other types of credit to your credit portfolio.
For example, you can get a car loan or a personal loan. This will show that you’re capable of handling different types of debt. It will also help you improve your credit score.
5. Limit Your Credit Inquiries
When you apply for new credit, the lender will inquire about your credit report; this is called a hard inquiry. Hard inquiries can hurt your credit score. So it’s important to limit the number of hard inquiries on your report.
6. Get a Secured Credit Card
If you’re having trouble getting a regular credit card, you may want to get a secured credit card. With a secured credit card, you put down a deposit equal to your credit limit. Then you use the card like a regular credit card.
7. Get Help from a Credit Counselor
If you’re having trouble improving your credit score, you can get help from a credit counsellor. A credit counselor can help you develop a plan to improve your credit score.
Conclusion
There are many things you can do to improve your credit score to get a better mortgage. You can start by paying your bills on time, maintaining a good credit history, and using a credit monitoring service. Following these tips can improve your credit score and get the best mortgage possible.
If you are seeking mortgage advisors in the UK, you can work with us at Everest Mortgage Services. Our team of experts aim to help you secure your finances for the biggest changes in your life from buying a home or making other significant purchases. Get in touch with us to learn more about our services.
