Mortage Lending is Up; Make Sure You’re at the Top of The Queue
October 22, 2009
The Council of Mortgage Lenders (CML) has announced an estimated 2% rise in gross mortgage lending during September.
Positive news, yes, but we’re hardly out of the woods yet. To put September’s rise in context, lending was still down by 27% year compared to September 2008.
Lenders are still cherry picking only the most robust applications from the most reliable mortgage applicants.
To stand the best chance of securing a loan, you need a squeaky clean credit score. Follow these steps to stand out from the crowd by sprucing up your credit report…
1. Assert your right to vote
As a protection against fraud, lenders use the electoral register to check that you are who you say you are and that you live at the address that you claim to. So if you aren’t registered on the electoral roll – or haven’t updated your details with your current address, lenders may need additional proof of your identity or refuse your application.
2. Sever irrelevant relationships
When you apply for credit, lenders are able to also check the credit reports of anyone with whom you are listed as having a financial relationship, in case their financial situation makes it difficult for you to meet your repayments. This includes anyone that you have a joint mortgage, credit card or bank account with. So if you are separated or divorced, make sure you tell your lender and the credit reference agencies as soon as possible.
3. Cut your credit
Lenders look at your credit history to see that you are managing your repayments. Even if you are meeting your current repayments, if you have a large amount of available credit (for example on credit cards), lenders not feel comfortable that you could manage to meet the repayment on your application if you were to ‘max out’ your existing available credit too.
If you have additional capacity on credit cards that you do not need, ask the provider to lower your credit limit. Or better still, move outstanding balances to your card with the lowest interest rate and close the unused credit card accounts.
4. Get yourself a reputation
If you’re a first time buyer and have never had a credit card or loan, it makes it difficult for lenders to establish that you have a good history of meeting repayments.
So if you’re a first time buyer thinking of applying for a mortgage, consider taking out a credit card six months prior to making an application. Using it and paying off the balance in full each month will build some basic credit history.
5. Eye the detail
Ensure that your report accurately reflects your current circumstances. Keep a watchful eye for rogue accounts or charges caused by identity theft or fraud and for duplicate entries that result in duplicates of your unpaid balances. Lenders may not always update the credit reference agencies straight away, so if your circumstances change or you notice information that is outdated, ask your lender to inform Experian and Equifax immediately.
- Coming next; how to manage your credit status to maintain a healthy credit score!