Martin Lewis shares tips for boosting your credit file…and it WILL help you get accepted for a mortgage
The nation's favourite money expert has unveiled his top credit file tips for the year
WHETHER you are taking out a loan, applying for a credit card or looking to get a mortgage, having a squeaky clean credit file record is generally a must.
To gauge whether you’re a match for them, lenders will trawl through your credit file, checking details like if you’re on the electoral roll and whether you’ve ever had your home repossessed.
Speaking on ITV’s This Morning today, money expert Martin Lewis shared his tips for making your credit file more appealing to lenders.
Here’s the lowdown on how to make your credit file the most alluring it can possibly be:
1. Know the terms
A credit score and a credit file are two different things.
A credit score is a number out of 1,000 which gives lenders a general idea of how safe or risky you are as a borrower.
Credit scores are available for free on a number of online sites, including ClearScore and Noddle.
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Meanwhile, a credit file provides a history of your financial life, including whether you’re late paying off any of your credit cards and if you’ve not been keeping up to date with mortgage repayments.
Credit files also contain personal information, like your address and any outstanding court judgements.
Martin recommends people check their credit file every year and before making any big applications.
Credit files can be checked through Equifax, Experian and Call Credit.
2. Use credit properly
One of the best ways to enhance your credit file while boosting your credit score is to use credit cards well.
This means paying for something, like a holiday or computer, using a credit card and paying off the amount in full and on time.
This shows lenders that you can be relied on to repay money you owe in a timely manner.
Of course, for some, previous late repayments will be the reason why lenders reject their applications, so make sure you only buy what you can afford.
3. Get on the electoral roll
Featuring on the electoral roll makes it easier for lenders to identify who you are and trace you.
From a privacy perspective, this may not be ideal. But, Martin said, ‘If you’re worried about junk mail, opt out of the ‘open’ electoral register.
4. Don’t come across as a ‘credit whore’
Try not to make multiple applications in a short period of time, as it won’t do your credit file any favours.
While making ‘soft searches’ or getting quotes is fine, submitting numerous applications for different credit cards or loans doesn’t look good and will put lenders off.
5. Apply at the right time
If you’re applying for something major like a mortgage, apply for that before a bank account.
The timing of any applications you make is important, as applications stay on your credit file for a year.
Anything truly dodgy, like county court judgements or payment defaults, stay on your record for six years.
6. Stability over switching
Money experts across the country have been encouraging people to switch accounts and get the best deal for years now.
But, when it comes to keeping on top of your credit file, switching bank accounts frequently isn’t ideal, as lenders are looking for evidence of stability.
‘Plus, putting a landline number down rather than mobile is good evidence of stability’, Martin said.
7. Every error counts
Keep details like your address up to date across all your outgoings, including your bills.
Martin said: ‘I once did a TV money makeover for a woman looking to buy a house, who couldn’t work out why she’d been rejected for a mortgage.
‘It turned out she had an old, technically active but unused mobile still registered to her old home. That was the final straw killing her application.’
8. Hang out with the right people
You won’t be financially tied to anyone just because you are married to them.
But, if you have ever held a joint account with someone or been liable for bills with someone else, their poor credit history could harm your likelihood of getting a loan.
9. Don’t use credit cards to withdraw cash
Withdrawing cash from your credit card, can harm your credit history.
According to Martin, lenders view the action as ‘poor money management.’
Some credit cards are designed to be used to withdraw cash overseas. But, unless you've got one of those, don't be tempted to use cash machines with your credit card abroad.
10. Make payments on time, every time
It sounds so simple, but make sure you make repayments and pay bills on time. With many bills, like energy ones, you can often get a better deal by paying with direct debit.
Plus, this will ensure those pesky lenders can never accuse you of making late payments again.
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