House prices are on the rise, according to new figures from both the Halifax and Nationwide – and even thought the reported increases are 1.2 per cent and 0.4 per cent respectively, it sounds like bad news for would-be first time buyers.
Get a FREE Credit Check with Propertywide.
But the picture isn’t necessarily bleak. Although Bank of England data shows that mortgage approvals fell in September, some lenders have reintroduced 90 per cent mortgages, which were so common before the credit crunch.
Peter Turner, managing director of Experian Interactive, explains: “Credit conditions are undeniably tight but the probability of very low interest rates for the foreseeable future, combined with the increasing costs of renting, makes home ownership comparatively affordable. The hurdle to get over is being accepted for a mortgage.”
Lenders are also perhaps becoming more sympathetic, while remaining cautious, as a new partnership between the Halifax and Experian CreditExpert demonstrates. Applicants who are turned down for a mortgage because their credit score was not high enough get a bespoke membership of CreditExpert, including access to a team of credit experts who can give them personal advice on how to improve their credit status – and, hopefully, the keys to their own front door.
If you haven’t got as far as putting in an application yet, these tips could help to get you the score you need.
1. Understand how lenders calculate credit scores
They take information from the personal history of your credit accounts contained in your credit report, plus details from your application and give relevant items a value, using their own unique formula. The total is your score.
2. Make sure your credit report is accurate
Go through it carefully, looking for discrepancies such as different ways of listing your address, and clerical errors, such as duplicate listing of accounts or closed accounts marked as open. Contact the relevant lender about anything you disagree with. It’s free to see your Experian credit report with a 30-day trial of CreditExpert.
3. Take a reality check
There’s no point applying if you haven’t saved a large enough deposit or don’t earn enough to keep up with the repayments without relying on your credit card. Applying to every lender you can find could actually harm your chances. Each application is recorded on your credit report and if lenders see lots in a short period, they could think that you’re desperate or suspect a fraud.
4. Make yourself more attractive
Simple steps can add valuable points to your credit score and make you more attractive to mortgage lenders. Try registering to vote at your current address, closing unused accounts or adding a note explaining if special circumstances, such as illness, caused past problems.
5. Remember, remember
Make sure you make repayments on time, every time – a missed or late repayment stays on your credit report for at least three years and could cost you the house of your dreams. Set up direct debits if you’re forgetful.
6. Know the score
You can find out your Experian Credit Score as often as you like during your free trial of CreditExpert – it will give you a good idea of how an application will be assessed.
7. Be patient
There’s a reason why the average age of a first time buyer is 35 – it takes time to build a good credit history, save a sufficiently large deposit and earn enough to take on repayments and running costs. It’s worth knowing your credit status – as it may well pay off in the long run.