What Is A Credit Score For A First Time Mortgage Application?
One of the main factors which will determine your ability to obtain a mortgage is, of course, your credit score. Darren Martin, and independent financial advisor breaks things down into bitsize pieces to understand easier.
All credit facilities and commitments will be thoroughly checked by the lender. Mortgage lenders have access to, and use, multiple credit reference bureaus to check your current and past credit history. If you either fail or forget to disclose these then this may have an adverse effect on your borrowing capacity, or the lender could even decline the application.
The types of credit commitments which must be disclosed include the following: credit cards, personal loans, hire purchase agreements, car finance, student loans, interest free credit, store cards, catalogues, mobile-phone and tablet device contracts. Things like bikes and sofas on finance also need to be declared. Even credit facilities such as credit cards with a zero balance need to be declared to the lender.
It's always a good idea to obtain an up to date copy of your credit file before commencing the mortgage process. This will allow you to identify any current or historical credit issues. As well as credit commitments, lenders will also want to be confident that you are responsible in utilising the credit available to you and you are comfortable maintain the monthly payments. Although adverse credit will have an impact, it's not the end of the world.
What is adverse credit?
Adverse credit includes such things as CCJ's (County Court Judgements), Defaults, Late or missed payments, IVA's, and Bankruptcy.
Whilst adverse credit doesn't mean you can't get a mortgage, it could mean that only specialist lenders may be available to you. As an experienced mortgage broker with many years of dealing with all sorts of client scenarios, I will be able to give you the best advice and secure the most cost effective option for you.
Improving Your Credit Score
If your credit score is low, there are a number of ways you can improve it. Where you have an unused credit facility, it may be good practice to close the account – for example a credit card that you no longer use. If you have defaults or CCJ's, repaying any outstanding balance will certainly help to boost your credit score, although lenders will take even repaid CCJ's and defaults into account for a certain period.
Read more on the JAMortgage UK website: https://jamortgage.co.uk/