If you’re a first-time buyer looking to secure a mortgage, you will no doubt have heard that a good credit score is the most important factor standing between you and approval from a prospective lender. This, in fact, is one of many mortgage myths that are commonly perpetuated, and whilst your score is a decent enough indicator as to your financial standing that is worth keeping an eye on, banks themselves are far more likely to scrutinise your credit history report instead. Thus, understanding how this report works and making sure the information within it aligns across the three main credit agencies (Experian, Equifax and CallCredit) should be step one in the quest to own your own home.
With that in mind, here’s a breakdown of some of the most important factors to consider when preparing and reviewing your credit history.
Erroneous missed payments
There may well have been simple misunderstandings between you and your bank in the past; instances where payments were thought to have been missed that you later proved had indeed been made on time or within the terms of your contract. It’s crucial you make sure that any such discrepancies are cleared up on your credit history, ensuring that the company removes any unjust black marks.
It’s possible to have two addresses on the electoral register at once, but it’s best if possible to keep it to one, which should always be your current, primary place of residence. If you’re not listed on the register at all, be sure to sign up quickly, and if you’re still listed under an old address – as it can be all too easy to forget to update it – this should also be corrected ASAP.
Particularly if your address contains a combination of letters and numbers, make sure that it’s stated correctly and uniformly across all agencies, as slight administration errors, like being listed as living at ‘Flat 2B, 7 Brick Road’ on one and then simply ‘7 Brick Road’ on another could see your mortgage application needlessly rejected.
If you marry or change your name by deed poll, make sure this is also updated on your credit report. It’s advisable to do this as quickly as possible too, as even though the agencies themselves are required to fix errors and suchlike within 28 days, it’s not uncommon for it to take some time for details to reach banks and lenders, and any inconsistencies between your report and your application could once again see you turned away.
To make sure your credit report is up to scratch, you can request to see it at a cost of £2 from the aforementioned agencies, Equifax, Experian or CallCredit. Taking a little time now to make sure they’re kept up-to-date will be more than worth it down the line if it avoids any unwanted delays and gets you one step closer to owning your own home.
Samuel Gibbs is the Co-Founder of Homerun, the Online Mortgage Broker for first-time buyers. They are launching their new First-Time Buyer Tools later this year, which provide aspiring first-time buyers a month-by-month path to home ownership.