How Important is Your Credit Score When It Comes to Buying a Property?
House buying can be one of the most stressful times in someone’s life. It is certainly one of the biggest purchases that many people make. They might have saved for years to get a deposit together and searched around for the best deals, however, all of this can be for nought if they don’t have a credit rating that supports the mortgage they want to get. Let’s look at how important your credit score is when it comes to buying a property.
What Score Do I Need?
There isn’t a prescribed minimum score needed in order to get a mortgage. Different lenders required different scores in order to qualify for their mortgages. What is certain though is that the better your credit score is, the better the deal will be on getting a mortgage. If you need to check your credit score, then you can go to one of the three main credit reference agencies in the UK. These are Experian, Equifax and Clearscore. They will be able to give you a free credit report with an indication of your credit score. Recently there have also been several apps for mobile devices that will also monitor your credit score and notify you of any changes.
How Do I Improve My Credit Score?
When mortgage lenders decide to give a loan to someone, a credit score is one of the only factors that they look at. They will also consider your income, your level of savings and what debts you have, even if they are well managed. It will all come down to the relationship with your bank. If you have been on good terms for several years and have kept up with your bill payments, then this will stand you in good stead. The more deposit you have the better as well, though ideally you should have at least 10% of the purchase price for a deposit. If you need to build your credit score, then the best way to do this is to use products such as credit cards. You will use these and if you pay off the monthly balance each month then this will help to build your credit score.
What if I Have A Bad Credit Score?
If your score is not particularly good, then you won’t necessarily be prevented from getting a mortgage. Certain lenders specialise in giving mortgages to those with less than perfect credit scores. Speaking to one of these lenders will let you know what your options are. It will all depend on your monthly income and outgoings. If there is room for improvement in your credit score, then you are less likely to get a mortgage. What you will find, however, is that if you are able to get a mortgage the terms will be more onerous. This is most likely to take the form of a higher interest rate than would be available to others.