When applying for a mortgage or any credit, lenders will take in to account an applicant’s credit score. So what is a credit score? This is a way of assessing how good a potential risk you are to lend to and can vary from lender to lender. Virtually all lenders will take into account your credit file which in the United Kingdom is generally held by either Experian or Equifax, the two main credit checking companies.
A credit file report will show your credit history in terms of who you have borrowed from, how much, any current outstanding balances and your repayment history. Additionally it will show any credit searches that have been done against you, by whom and, if known, for what purpose.
In addition to your credit file, lenders will also consider other factors, such as employment and address history. Stability in these areas helps to enhance your credit score, and here are some other ways of enhancing your credit score.
- Check out the information that’s held about you. You can usually get a free copy of your file or a copy for a nominal fee. Ensure it is accurate and get anything rectified that is not
- Set up a minimum payment direct debit for your credit cards, as this will ensure you never have any missed payments. Similarly set up a direct debit for contract phones, as this will also provide evidence of good payment history
- Check that your credit report address and your current address match. This is particularly important in Edinburgh where flats can have multiple address systems applied. Use the address that the credit report uses when aligning your address
- Spread out any credit applications or checks, as too many close together can put some lenders off you as you may be getting rejected elsewhere
- Wherever possible use a landline number on applications – one particular high street lender views this quite favourably as evidence of stability.