We are often asked by would-be buyers how they can get on the property ladder in York, a task which feels impossible!
One way to start the process of getting ready to buy your first home is to consider your credit score as early as possible. It’s something you can control and having a good credit score can make a huge difference when applying for mortgages.
We asked a local York mortgage adviser for some tips on boosting credit scores and this was their response:
- Especially for higher Loan-to-Value mortgages (often the case with first time buyers), some credit is generally better than no credit at all. Having no credit, to a lender, is high risk. Someone with a track record of having credit and paying it back every month is a lower risk. I would suggest getting a credit card if you don’t currently have anything, using it for things like fuel and paying it off monthly rather than having a balance (which can be costly).
- Set everything to be paid by direct debit every month to ensure that you don’t miss payments
- Settle any missed payments right away and call the lender to explain. This will reduce the chances of it appearing on your credit file.
- Be on the electoral roll (this is super important!)
- Make sure all names and addresses (including postcodes) are spelt correctly – i.e. if Benjamin, don’t use Ben. If 32a Main Street, don’t use 32 Main Street etc.
- Try to have a stable address history for the last three years (1-2 addresses is much better than 4-5)
- Settle all adverse credit lending (CCJs & Defaults etc. as soon as they are registered)
- Don’t let pride get in the way! Don’t ruin your credit history over a £40 mobile phone contract dispute
- Have a landline phone number – as with a few lenders this still can still help
- Monitor your credit account for fraudulent activity, which is only usually spotted when you apply for new credit. If this goes unnoticed it can then cause serious problems and limit your options.
- Try not to max out on credit card lending. £1,900 over two cards where the credit limits are £2,000 each is better than £1,900 on one card with a limit of £2,000.
- If you use your overdraft, never go over the limit. Once you are paid at the end of the month, ensure that you focus on paying off the outstanding fees. Occasional use is not typically a big issue.
- Space out applications – don’t do too many in a short space of time!
- Never use Pay-Day Loans – they assume (often correctly) that you need help just getting through the month and therefore there is very little chance of someone lending you a significant amount of money
Every lender uses their own system as well as getting info from either Experian, Equifax or Call Credit/Trans Union (the three credit reference agencies). There are no hard and fast rules, although the above should prove very useful.
To discuss your personal financial position or to find out more please contact Yorkshire Life Financial Services – 01904 890 242
Take a look at our guide The Process of Buying a Property to help you understand what to expect.
