If you are a first time buyer and hoping to get a mortgage shortly, what should you do to get the best credit rating? There are actually a few measures that you might take, if you start in advance.
What is a credit score?
Your credit score is an evaluation of how well you could handle credit and from that, the building society will make a judgement as to how potential you are to actually pay back the loan in full.
This is crucial in some ways. For a start, a poor credit rating could totally prevent you from getting a loan at all. Though it does not go that far, then a poor credit rating can still affect the amount that you might borrow and increase the mortgage rate that you will be charged when you do get a loan.
Can you make better your credit score?
So, what can you do? Well the first thing is to consider that it is calculated based on how well you are conducting the credit that you do have. This means that if you have no credit at all or are handling it badly, then you will score badly.
If you do have credit then be sure that that it is all being paid off on time, every month. A borrower repaying cash at the correct rate, or faster, is going to score well and look good.
A good credit score comes from having several credit
But there is a more vital step to take and that is for those that do not have credit. Whereas normally it is best to steer clear of unnecessary credit in case it is a huge temptation to buy what you do not need, if you have never had any credit then this might count against you. So it could be very worth while, as long as you are disciplined, taking out a credit card merely to build your credit score.
However, if you take this drastic step use the card for nothing in excess of regular grocery shopping, maybe even cutting the card in half! Although be wary that this too might cause problems if the building society charges you a fee for not using the card!
Check your credit report
Lastly, you should be certain that you check your credit report. Request a copy of it from one of the main credit reference agencies and check in excess of the report very carefully. Be sure that any mortgages you have had that have been paid off are recorded as being paid off. This means make sure they are there and that they are not shown as exceptional.
Also check other facts are correct, that mortgages that should be there are recorded correctly and there is nothing on the report that does not actually belong there.
Once you have done all of this you should have the best credit score that you can hope for and a good chance of not just getting your first loan, but also of being charged a good interest rate rather than a more expensive one.
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