Buying your first property is an important part of life, and often the exact minutiae of purchasing a property can be daunting. We’ve highlighted several frequently asked questions that you may be asking yourself about how your credit score can affect you during this process, to better allow you to make informed decisions when stepping onto the property ladder.
What Is a Credit Check?
A credit check is a view of credit accounts you’ve had. It details your repayment history and any missed or late payments, bankruptcies, individual voluntary arrangements and court judgements can stay on your credit history for at least six years.
It is important to note that by using one of the credit checking tools—such as a lender or credit company—you will leave a “footprint” on your credit report in the form of an enquiry. This will not negatively affect your credit score.
What is a “footprint”?
A credit search “footprint” is a mark left on your credit file which states that you, a lender or credit company has looked at your file, which usually happens when you apply for credit.
As mentioned above, an enquiry is known as a “soft footprint” whereas an application for credit such as a mortgage, credit card or loan is known as a “hard footprint.” “Soft footprints” are only visible to you, whereas “hard footprints” will be visible to any lender and risk lowering your credit score. Having a larger number of “hard footprints” in your recent credit history can lower your score faster.
Will an agreement in principle affect my credit score?
A credit score is a tool used by lenders to help determine whether you qualify for a mortgage. Using the information on your credit report and the information you supply for your application, the lenders then calculate a score that represents your total credit history. If you have multiple credit checks carried out over a short period of time, it can affect your credit score rating.
What should I do if I have a bad credit score?
Many companies arrange mortgages for clients with all circumstances and situations. Whether you have missed payments or a more serious issue, many lenders will still consider lending to you. If this concern applies to you, it is recommended that you obtain a copy of your credit file, as this will help the lenders to understand your circumstances and obtain the most competitive mortgage for you.
How can I make my credit score better?
Having a better score means that lenders are more likely to approve housing applications. There are many ways to improve your credit score, including:
- Register to vote
- Reduce the amount of debt you owe
- Try to avoid missing payments
- Check your credit file regularly
- Don’t make lots of loan applications in a short space of time
- Your dedicated adviser will be able to provide help and support in accessing and increasing your credit score.
By keeping these tips in mind, you can avoid many of the financial mistakes first time home buyers will face and keep your credit score high.
If you would like to learn more about how Keey can help you advance your way up the property ladder, contact us today!