HTB makes first timers' credit scores more important

21 November 2013

The number of mortgage applications is up 9% on last year but many are still being rejected, according to Experian.

The credit expert says this is in part down to poor credit scores. James Jones, head of consumer affairs at Experian, explained: "Help to Buy has put homeownership on the immediate agenda for would-be first-time buyers who had expected to spend several more years saving for a deposit.

"But a small deposit means lenders are putting even greater stock in your credit score as a guide to how likely you are to meet your repayments, especially as small deposits mean high LTVs, stretching their affordability for young buyers in particular."

A quick guide to Help to Buy

The company offers the following advice to would-be home buyers whose credit score is letting them down:

  • Don't re-apply for a mortgage until you know why you have been turned down. You should always speak to the lender first to find out why you haven't been able to get a mortgage. Every time you apply for credit you leave a 'search footprint' on your file, which stays there for the next 12 months.
  • See if you could improve your rating for next time. Three out of four people who have been turned down for credit don't do this.
  • Check everything is accurate and up to date. This includes, whether you're on the electoral roll, accounts you may have thought were closed, and financial ties you no longer have. You should also query anything that is missing from your credit file.
  • Start to build a new credit record. If you have a low credit score, set up direct debits to make all payments on rime, use a credit card to pay for your weekly shop and, most importantly, pay it off at the end of the month.
  • Don't panic. You can rectify the situation if you have a poor credit score, as lenders tend to focus on your recent credit history.

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