10 Ways to Improve your Credit Report If You Want to Take Advantage of The Government’s ‘Help to Buy’ Mortgage Guarantee Scheme

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As thousands of first-time buyers start to take advantage of the government’s ‘Help to Buy’ mortgage guarantee scheme, Equifax highlights that buyers will still need an excellent credit history to secure a mortgage with a 5% deposit.

man improving credit score
buyers will still need an excellent credit history to secure a mortgage with a 5% deposit.

“The new scheme does mean more first-time buyers will have the opportunity to get on the property ladder much sooner than expected, with predictions that the average age of a first-time buyer (FTB) is set to fall by around six years*,” explains Neil Munroe, External Affairs Director for Equifax. “This is certainly great news, as our latest research** on first-time buyers revealed 48% of respondents said they only had 5% deposit or less, and it was for this reason they were not yet in a position to buy their first home.

“However, taking on a mortgage is a long-term financial commitment; therefore the banks offering the ‘Help to Buy’ scheme will also conduct affordability checks to ensure that even if there is an interest rate rise, the customer’s income will cover repayments.”

Lenders make checks with credit reference agencies to see whether an applicant has kept up to date on repaying their credit. Having several credit cards with high limits and missing repayments may be a cause for concern for lenders and could give the impression the person is financially stretched.

“To ensure those credit checks come back clear, it’s important an individual’s credit information is completely up to date – giving them the best chance of getting a good mortgage deal. We urge homebuyers to review their credit report before they apply. Then at least they can spot any information that might need updating – such as being registered on the electoral roll – to put them in the best position to get a good deal. Homebuyers can follow our 10 steps to improving their credit report to help them secure that all important mortgage,” concludes Neil Munroe.


1.    Do you have a credit history?

Lenders look at all your credit information to make a case-by-case decision on your application. If you already have a credit history, including credit cards, loans or accounts and contracts, the lender can look at your credit report to decide whether to approve your application. It’s worth establishing a credit history by applying for a credit or store card and paying it off in full at the end of the month.

2.    How to get the best rates

Your credit history won’t only help you secure a mortgage; it may also help you get the best rates. If your credit history isn’t as good as it could be e.g. you’ve got some late or missed payments on a credit card, lenders may offer you something on a higher rate. This will cost you more in the long-term. So it’s worth looking at ways to improve your credit report.

3.    Check your credit report

Apply for a copy of your credit report to gain an overview of your financial commitments and see exactly what the lender sees.

4.    The right to explain

If there’s a mistake on your credit report, contact the credit reference agency to get it corrected. You can also add a notice of correction to explain any missed payments as a result of life changes, such as loosing your job or divorce. The lender has to read this when considering an application.

5.    Are you registered?

The electoral roll is used by many companies for identity verification purposes in order to combat identity fraud. It is vital, therefore, that you are registered on the electoral roll at your current address. And if you believe the address is not properly presented, you can ask the credit reference agency to take this up with the lenders and the local authorities.

6.    Some events stay on your credit report

If you declare yourself bankrupt or take out an IVA, it will be on your credit file for six years and impact your ability to gain access to credit during that period. If you fall into this bracket, get professional advice before applying for a mortgage.

7.    County Court Judgments (CCJ)

If you’ve had a CCJ and it is now settled make sure the settlement is recorded on your credit file. If not contact the court to get confirmation details and inform the credit reference agencies.

8.    Stop Applying

If you have been refused credit, obtain a copy of your credit report. But DO NOT carry on applying elsewhere. Each credit application search by a lender will leave a “footprint” on your credit report. Too many searches in a short space of time can be perceived by lenders as you may be over-stretching yourself financially and could therefore affect your ability to get credit.

9.    Avoid a high balance

Avoid carrying a balance on your credit cards that is more than 30% of your credit limit. Lenders may view this as a sign of you having too much credit already and that you therefore may not be able to keep up with any new repayments.

10.    Close it Down

Make sure any accounts you don’t need or use are closed. Lenders are paying more attention to the total amount of credit available to an individual and whilst you may not be using them, these accounts could affect your ability to get credit.

The Equifax Credit Report is accessible for 30 days free simply by logging onto the website. If customers do not cancel before the end of the 30 Day Free Trial, the service will continue at £9.95 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.

*Research conducted by myhomemove, the UK’s largest provider of mover conveyancing services
**Equifax surveyed 851 of its customers in April 2013

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