With mortgages getting harder and harder to receive, we have put together a post that breaks down the mistakes everyone makes that slowly but surely wreck your credit history.
A tiny mishap in your credit history can prevent you from opening bank accounts, getting credit cards, getting mortgages or even mobile phones. Here is what not to do:
1. Failing to spot mistakes in your credit history
It is not uncommon for errors to occur in your credit file, which can lead to you being rejected for a loan, mortgage or credit card. The rejection can then have a further negative affect on your credit score.
To check your credit score you can use online credit checking companies such as Experian. If you are thinking about applying for a loan, it is a good idea to check what your lender uses to check credit history and check with them as well.
2. Making too many ‘hard search’ credit applications at once.
Even if you’re just enquiring about a loan, credit card or mortgage- these are marked as strikes against your record. The majority of lenders use a ‘hard’ search when offering you a loan, which lowers your credit score and can make it harder to access cheap borrowing in the future.
Too many loan applications in a short period of time could make lenders think you’re desperate for cash and lead to a rejection.
3. Not being included in the electoral roll
By being on the electoral roll you give added assurance to lenders that you are who you say you are and live wear you say you live. This will help support your application and improve your credit score, since identity verification measures help protect lenders and borrowers from possible fraud.
4. Using too much of your available credit
Even if you pay on time and in full, maxing out your credit limit is looked at negatively by lenders and so will lower your credit score. Having a high credit limit and only using a low percentage of it can have a positive impact on your credit score.
5. Forgetting to pay or skipping the odd agreement
One missed payment can last 6 years on your credit file, therefore if you ever amend a direct debit or close a bank account make sure that your credit card, loan and mortgage provider are notified.