Knowing what a credit score consists of is the first thing. All mortgage lenders have their own credit score which designed to capture business which fits their lending profile.
The exact methodology is secret but we know that in broad brush terms the score is arrived at by considering the following;
- Your payment history. In other words, do you pay your monthly bills? This information accounts for a good % of your credit score. If you think about it, this is pretty obvious. After all, who wants to lend money to someone that has a track record of not paying their creditors!
- Another % of your score relates to your borrowings and more specifically how much you are borrowing against the total credit limits you enjoy.
- Part of your credit score comes from things like the age of your credit history. In other words, how old is your oldest bank account? do you have mature loans that you’ve held for some time? Do you have mature savings accounts?
- How close are you to your credit limit on your credit cards?
- Do you have any bad credit? I.E. whether you have CCJs against your name (County Court Judgments) or defaults.
- What % deposit do you have towards the property (the higher the better)
- The final part of your score is based around stability and lifestyle, are you on the Electoral Register? How many addresses have you had in the past few years? Are you married? Self Employed or Employed etc
However, scoring varies amongst the banks and Building Societies and and there are many additional sources of information that are weighted differently between mortgage lenders.
If you are a well paid, self-made business person you might have more wealth than your neighbour but if your income relies on self employment you might find yourself getting less points than you might expect. Lenders like stability and they generally equate that with long term employment.
Taking into account all of the above, it may surprise you to find that having a mortgage actually increases your credit score, especially once a few years of regular payments have gone by and more especially if your home’s value is growing. Your mortgage becomes an asset, in credit terms at least.
If you need to check your credit history consider contacting one of the major credit agencies like Equifax, Experian or Call Credit - or view this short video for more information.
For more information contact us or speak to a mortgage adviser on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
5 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
8 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
14 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
23 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
23 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
More information
Trusted by
