If you’re looking to buy a new house then the chances are you’re already thinking about mortgages, affordability and how to make it all work. Here’s a look at how to credit scores affect mortgage applications and what you can do to give yourself the best possible chance of mortgage application success.
The Affect Of Credit Score On Mortgage Application
In short, the answer is yes, credit scores affect mortgage applications. When it comes to applying for any sort of loan your current and past finances are usually delved into pretty extensively. When it comes to a mortgage, your affordability is looked at in great detail and this includes how you have been with money in the past. Your credit score is an indication to anyone checking whether you have outstanding debt, what you have been like in the past with making payments on time and a general overview of your financial history. This means that your credit score can help a company to decide whether they are going to lend you money to buy a house and how much they are going to lend you. Mortgage lenders will look into lots of this in more detail than just what your credit score says – so be prepared to show pay slips, bank statements and evidence that shows you feel you are going to be able to keep up repayments on any amount that you are approved to borrow.
What Can I Do To Improve my Credit Score?
The first thing to do is check your credit score and give yourself an idea of where you are starting from. If you have any outstanding debts then arranging payment plans on these immediately is a must – not only that but it is really important that you keep up with any agreed payments, as these are reported to the company that puts together your score. Sometimes a low credit score can be because you have never borrowed before and therefore they aren’t able to give an indication on what you will be like when it comes to making repayments etc. If this is the case then taking out a small credit card, spending each month and then paying off the amount in full can help to give your credit score a boost; but it’s super important that you make sure you pay off the full amount each time.
What Affect If I Already Have a House To Sell?
Having a house to sell can help with your mortgage application because it shows that you have already been sensible enough to be a homeowner – and that you are likely to have a lump sum of funds to put towards a deposit each. Just make sure that everyone involved in your application knows that you have a property to sell and that you are willing to sell your house fast if needs be – as this opens up your options and allows people to see that you have access to a lump sum of money as and when it is needed.
If you have any tips on mortgage applications and credit scores feel free to share them below!
*Collaborative post