A top tip for first-time buyers wondering how to get the best mortgage rate possible is to work on boosting your credit rating.
Obtaining the lowest rate possible means your repayments will be also be lower and this will help with your affordability.
But having a poor credit score could lock you out of homeownership altogether. So, being aware of what you need to do to ensure your credit report is in good shape will benefit all would-be home buyers.
According to free credit score app, CredAbility, poor credit scores are still locking thousands of renters out of the mortgage queue. It revealed it had seen a surge of users recently checking their reports and attempting to fix poor scores.
Aaron Peake, credit score expert at CredAbility, said: “We hear from renters every day who are doing everything right. They pay their rent on time, manage their bills, but still get told they’re not mortgage-ready. The system feels unfair, but your credit score is one thing you can take control of.
“If you’re serious about buying this year or next, now is the time to boost your score. A stronger credit score can mean lower rates, smaller monthly payments, and a much faster path to owning a home.”
Here he shares six ways to give your credit score a lift.
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Make your rent count
Rent is often your biggest monthly bill, says Peake, but most credit reports ignore it. “Free services like CreditLadder or Canopy can send your rent data to credit agencies,” he said. “If you’re paying on time, it shows up as a regular, reliable payment, just like a mortgage would.”
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Don’t close old credit cards
“It feels logical to cut up an old credit card once it’s paid off but don’t close it unless there’s a fee,” Peake advises.
“Keeping older accounts open shows lenders you’ve got long-standing, well-managed credit, which can bump your score.”
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Keep credit use under 30%
For those credit cards you are using, spending right up to your credit limit is a red flag to lenders, Peake explained.
“Even if you always pay on time, using too much can make it look like you’re overstretched,” he added. “Try to keep your credit usage below 30% of your limit to show you’re not over-reliant on borrowing.”
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Check for mistakes
Believe it or not, errors are more common than you think on credit reports. Peake said he’d seen everything from old addresses still being listed to mystery accounts people swear they’ve never opened.
“You can check your report for free through apps like CredAbility or TotallyMoney,” he said, and it’s worth doing every few months to keep it accurate.”
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Register to vote
Registering to vote, if you haven’t already, is quick, free, and gives your score a noticeable nudge in the right direction, said Peake.
“Being on the electoral roll helps lenders confirm your ID and address, which builds trust. It only takes a few minutes at gov.uk/register-to-vote, but it’s something many people forget about.”
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Hold off on new applications
“Every credit application leaves a mark on your file for six months,” Peake said. “Too many in a short space of time can make lenders nervous. If you’re applying for a mortgage, avoid taking out any new credit in the six months beforehand.”
