As you may know by now, we’ve recently purchased what could well be our ‘forever home‘. We’re in the final stages and are due to exchange and complete any time now.
This house move has been a dream of ours for sometime and over the last few years we’ve been meticulously working on building up our credit rating, in order to be in the best possible position when it came down to the point of applying for our mortgage. It took time, planning and a lot of patience but all the hard work paid off when we got the go ahead to purchase our dream home.
If you too are looking to improve your credit rating ready for a house move, or for any other reason, then below are a few things you may want to consider:
Get a credit card
If you’ve never had credit before, it’s difficult for a lender to assess you. Consider taking out a low limit credit card, make a couple of purchases on it each month, like fuel for example, and then repay the balance in full at the end of the month. This will show that you can responsibly manage credit.
If you have a bad credit rating already you may struggle to get a credit card from your high street bank, but there are alternative options available to you. Companies like Vanquis specialise in helping people re-build their credit history by offering low credit limits so it’s worth exploring avenues like this should you need to.
Register on the electoral roll
Registering on the electoral roll will improve your chances of being accepted for credit. Prospective lenders and credit reference agencies use this to check you are who you say you are, and you live where you say you live.
Pay your bills on time
One of the best things you can do in order to obtain a good credit rating is to simply pay your bills on time. Missed and late payments can stay on your credit file for up to six years, so it’s vital that you keep on top of them. Try to arrange a set date every month for all payments to come out of your account, ideally just after pay-day, that way you know you should have the money to cover everything.
Close any unused credit accounts
Close all credit accounts such as credit cards, store cards, mobile contracts and accounts that you don’t use or need anymore. Don’t just cut up the cards, you’ll actually need to call the relevant companies and get them to close down your account. If you don’t they will stay active on your credit file, showing lenders that you still have access to this additional credit.
Limit credit applications
Something I didn’t realise for a long time is that a note is put on your credit file every time a credit search is made by a lender – so don’t be reckless when applying for credit. The more credit searches carried out in a short space of time, the less likely you are to be accepted for credit. Therefore limit or space out any credit applications you make.
Your credit rating won’t go up overnight, so remain patient. After Adam went self employed we knew we’d have to wait a while to apply for a mortgage, due to the fact he would need two years worth of accounts to show our lender. We used this time to chip away at our debt and follow all of the steps above that I mentioned.
As with everything in life, there are no guarantees! However if you follow these steps consistently month after month then you should be on track to improve your credit rating just like us.