Top Tips to Maximize Your Chances of Getting Approved
Your credit score is one of the most important financial information when it comes to depreciation. It reflects your credit history not only to pay off your mortgage, but also other debts such as loans and credit cards as well as your energy and cell phone bills.
But homeowners may have seen their scores come under pressure over the past year, with the pandemic leading to job losses and reduced incomes, leading many to resort to credit cards, loans and payment holidays to improve their finances. Mortgage brokers say the best remortgage rates are only for those with the best credit scores, so what can you do with a bad score?
A bad credit score could delay or even ruin a remortgage application, leaving you on a lender’s more expensive default variable rate (SVR).
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“The best remortgage rates are usually reserved for people with better credit scores and those with low loan values,” says Paul Neal, mortgage advisor at Missing Element Mortgage Services.
“The key is to be ready and not to miss the end of your existing mortgage, as it can be costly if you end up on your lender’s SVR, which is usually considerably higher than a fixed rate.”
James Jones, consumer manager at the credit reference agency Experian, suggests checking your credit report and score between six and 12 months before your current mortgage expires to increase your chances of approval and access. better rates.
“Check your credit report to make sure everything is accurate and up to date, as even minor deviations can affect your credit score,” says Jones.
He advises to register on the electoral register and ensure that your address is correct and that all past debts are displayed as cleared and closed, as all of this can increase your score. The Experian and Equifax credit reference agencies have subscription services that allow you to check your report and rate regularly and get updates on changes.
TransUnion lets you check your score for free with Credit Karma Alerts and you can also do free monitoring with ClearScore. It is worth checking your report with all agencies as they contain different data.
Correct and clarify bad grades
You may have had money problems in the past year if you had coronavirus or lost your job. You can send a “ correction notice ” to the three credit reference agencies – Experian, Equifax, and TransUnion – explaining why you can’t pay off a debt or a bill and Mr Jones says lenders need to heed that.
Millions of homeowners have also taken mortgage payment holidays which were temporarily introduced during the pandemic until the end of March 2021. Mr Jones says that shouldn’t have hurt your score, but lenders could still be viewed negatively by lenders.
“If you’ve recently postponed regular payments due to coronavirus, make sure the mortgage lender is comfortable with this, as some lenders may see this as a sign of financial stress,” he adds. . Break all ties on your credit report with an ex, otherwise the bad grades they have will look bad on you, Mr. Jones says.
Rebuild your rating
Paying your bills on time and getting a credit card can help boost your score because you can build a debt repayment roadmap if you start early enough. But too many demands and too much credit can also be viewed negatively by lenders, especially the closer you get to the remortgage.
“Consumer lenders are wary of people who are ‘credit hungry’, so don’t max out credit cards and avoid very expensive monthly expenses like cars versus your income,” says Rhys Schofield, Managing Director of Peak Mortgages and Protection. Credit denials can also lower your score, so use eligibility checkers and do a software search with a vendor or comparison site as this gives an indication of which products you are most likely to be approved for and does not appear on your credit report.
Consider a product transfer
Homeowners have two options when re-amortizing. Shop for a new offer with another lender or switch to a new product with the same.
If you stay with the same lender, your new mortgage will be treated as a product transfer rather than a re-mortgage, which may mean you will need less detailed application and credit checks because your provider already knows to how well you’ve paid off your existing loan. This could be helpful if your credit score and income has been met.
“If your income has fallen, it may limit your choice of remortgaging,” says Andrew Montlake, managing director of mortgage broker Coreco.
“Most lenders now have a good selection of product transfer rates for existing borrowers where they don’t repackage based on income. That said, there are still some great choices for borrowers in the market, and any decent broker will be able to assess whether you can remortgage elsewhere.
“Don’t worry if you don’t have a perfect credit score, there are a multitude of lenders who check credit rather than scoring and specialist lenders who are able to screen borrowers with a range of credit issues. credit.”