Buying a house is an extremely exciting time in anyone’s life. Taking that step into owning your own home, getting on the property ladder, what a feeling! However, there are many things along the way that seem to put a dampener on the exciting google searching and property viewings. Technical things. Things like, mortgage brokers, repayments, surveyors and credit scores; none of which sound like they are going to help with planning the house party (because they probably aren’t). Although they all sound boring (because they probably are), but they will bring you one step closer to owning your dream house, each one a stepping stone in your brand new garden leading to your brand new front door. One of the things you’re going to need to purchase your dream home is a decent credit score. It matters and it needs thinking about early.
What is a credit score?
A credit score is a number based on your credit history, a report on how you have handled credit in the past, which shows how creditworthy you are to lenders. The higher your score, the more creditworthy you will be. Your credit history will include things like bank loans, credit cards, phone contracts and things you have been paying back monthly (like credit offered in a store).
How can I find out what my credit score is?
You can access your credit score quickly, easily and for free, on many websites including Experian, Equifax and Clearscore. Some will offer free reports for you to understand your own credit score better, with tips on how you could improve it.
How can I improve my credit score?
1. Keep checking on it
The best way to start improving your score is to get to know it. Check on your score and look for what sort of things could be affecting it… Have you missed payments? Are you near credit limits? Once you know areas of improvement, it is far easier to get started on fixing it. Make sure you check back regularly to stay on top of it.
2. Keep an eye on your credit utlisation amount
Having credit can help build credit, so it is often good to have a credit card, as long as you don’t rack up a load of debt on it. Maxing out credit cards each month will not look very attractive to a potential lender, so keep within the 30% utilisation rate (or even lower if possible) throughout the month and always make repayments.
3. Always make repayments
Ensure you are paying at least the minimum payment on credit cards and pay all bills on time. A history of showing you can keep up-to-date with regular payments will be a huge factor on your credit score, so set up direct debits or reminders to ensure they are always paid on time.
Did you know– Paying into a peer to peer product like StepLadder’s First Step Circle could help build your credit score? Find out more.
4. Use eligibility checkers before applying
A soft search is carried out when you use eligibility forms to assess which of the options you’ll have the best chance of getting when you apply – Your credit lender does not see these and they don’t affect your credit score. So if you’re looking for a new credit card or loan, use an eligibility checker before the actual application as a rejected application will show up on your credit report.
5. Get on the electoral roll
Lenders like to know you’re staying in one place. Getting yourself on the electoral roll shows that you have a stable address and makes you more attractive to lenders. It’s really easy to do, you just need to register here.
My credit score is excellent *proud stance*. Anything else I need to do?
Well done you, that is fantastic. All you have to do now is make sure it stays that way. Keep your information up to date and ensure you always make your repayments. Remember, your credit score can change so make sure you check it regularly and fix any errors that may be showing.
If you’re looking to build your credit score – why not join one of our First Steps circles which give you the potential to build your credit score, access to personalised support and can help build great personal finance habits! Find out more.
Michaela is the Head of Communications at StepLadder and is passionate about helping people be at their best!