What You Should Know About Your Credit Score Before Applying for a Mortgage
If you’re looking to buy a home or remortgage, the good news is that interest rates are currently at a record low, with some fixed-rate deals at less than 1%. On the downside, the lowest rates are usually reserved for those with the most pristine credit scores.
According to the experts, negative information on your credit record won’t necessarily preclude you from getting a mortgage offer these days. However, it could mean a difference of as much as 2% on the interest rate you are charged, equating to thousands of pounds a year.
Typically, people acquire a default on their credit file because of relying too heavily on credit cards in their 20s or missing a payment on a mobile phone or utility bill. The debt can come back to haunt them a few years later, regardless of their circumstances.
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Another issue is that people, who have never had a loan or credit card, can end up with a low score, even if they haven’t had debts – because they have no credit history and the system assumes the worst.
First-time buyers are urged to check their scores, ideally with all three main credit reference agencies (Equifax, Experian and TransUnion), at least six months before starting a property search. You should check everything is accurate and dispute anything that looks wrong.
A 200-word statement, known as a notice of correction, can be used to explain the circumstances behind defaults, such as a relationship break-up, unemployment or illness.
You should also make sure you are registered to vote at your current address as some banks use the electoral roll to verify your identity.
Read more about this story in The Guardian.