There is still hope!
Your credit score is one of the key pieces of information that a mortgage lender will review before they approve your application. Don’t let a poor credit score hold you back from affording your dream home! Plan ahead and read these tips to help you reach a shiny credit score in no time.
Pay back what you owe. On time.
Pay your bills on time to maintain a good payment history
Update your address as soon as you move so you don’t miss any bills in the mail. Alternatively, make sure all your bills are sent electronically so you can avoid this!
Set up automatic payments in your banking app or online banking service. This is a fool-proof way to ensure your bills are paid for on time. Let automation do the work for you!
Ensure that you have a credit history
"Having no credit history shows that I don’t need to borrow money, which should boost my score right?" Wrong. Having a history allows lenders to review and make an informed decision on your ability to borrow and repay.
With no history, lenders won’t be able to know if you are able to repay and keep up with payments when you borrow for the first time. Start practicing timely repayments and build up the documentation to prove it.
Pay off any student debt or loans
In addition to automating your bill payments, automate monthly payments to pay off debts and loans to stay on top of it.
Get your credit card spending in control
Open up a secure credit card
It sounds counterintuitive, but when you have a credit card and prove that you can pay off the amount each month, it can show your independence in financial management.
Take the offers to increase your credit amount
Got an offer from the bank to increase your credit limit? Great news! Take the offer, but keep your utilisation low and spend around 25% of your credit limit especially leading up to your mortgage application.
Avoid applying for a new credit card or signing a phone contract just before your application
A few extra hacks
Join the Rental Exchange Initiative
This scheme allows tenants to have their monthly rental payments recorded and contribute to their credit score. If you fall behind on payments, this will negatively affect your rating.
Register on the electoral roll
If you’re on the electoral roll, lenders are able to verify your identity and residency. This helps with confirming your living stability and rules out the possibility of fraud, which makes you a less risky borrower. If you’re not eligible to vote, then you can send all three credit agencies proof of residency and ask them to add a note to verify this.
Check in regularly and see how you’re tracking
Check for errors on your credit reports.
Fraudulent activity or technical errors can hurt your credit score. Catch these by doing a regular check of your spending each month and make sure you dispute any errors immediately.
Conduct a soft check regularly so you can stay on top of your credit score
It’s good practice to check regularly so you are not scrambling to boost it before you’re applying for a mortgage. Don't worry, conducting a soft check will not affect your credit score. Check your credit score for free here.