Credit Score: Why is it Crucial for Mortgages

When it comes to securing a mortgage for your property, your credit score plays a pivotal role. A higher score not only increases your chances of loan approval but also helps you achieve better interest rates.
What is a Credit Score?
It’s a prediction of your credit behaviour, such as how likely you are to pay it back on time, based on your credit history. Essentially, it’s predicting how likely you are to pay back the money which you borrow, on time.
Having a good credit score can not only help you qualify for a mortgage, but also other products such as loans, credit cards, or rental properties.
To help get the best mortgage for you, mortgage brokers are available to help you with this stressful process.
Here are some main points to consider:
- Register to vote – Being on the electoral roll helps lenders confirm your address and access your credit history. Without it, your mortgage application could be delayed or declined.
- Making regular payments with a credit card on time – Use a credit card for everyday spending and pay it off in full each month. On-time payments boost your credit, while missed or late ones can harm it.
- Get rid of ‘cards collecting dust’ – Lenders may see inactive accounts as potential debt risks. Keep only the cards you actively use.
- Don’t max out – Keeping credit usage low shows good financial control and helps boost your credit score.
- Aim to pay more than the minimum amount – It shows lenders you’re managing debt well and can improve your credit score.
- Check for any mistakes or fraudulent activity – Report any mistakes or unfamiliar activity to your provider promptly to protect your credit score.
- Be cautious when requesting new credit – Too many applications can hurt your score. Space them out to show you’re managing credit responsibly.
Written by Vicky Wojslaw
Summer Sky Investments Ltd.