Why? Because your credit score affects a lot of things like any loans and bank accounts. It also affects the type and price you will pay for your mortgage.
Jo Jingree, director of Mortgage Confidence, says: “People with credit problems are often quite embarrassed about their situation and it can almost stop them from dealing with the problem.
“But credit problems can occur for all sorts of reasons and I can assure you that there is no judgement here. We all have blips in our lives, and I try to be as understanding as I can. The first step is always the hardest but it’s better to face these things head on.”
So, what exactly is a credit score?
Your credit score is what lenders use to help them decide how likely it is that they will be repaid on time if they give you a loan – like a mortgage or credit card.
The score is personal to you as it’s built on your credit history. Your credit history will include your total level of debt, your repayment history, your number of open accounts and other factors.
“Essentially, your credit score is your financial footprint. Lenders want to assess the risk of lending to you. And weigh up how likely you are to pay back your debt and on time,” says Jo.
What factors can affect your credit score?
A number of factors affect your credit score, as each lender has its own risk appetite. These include:
- Payment History
- The amounts owed
- Credit history length
- Your credit mix
- Any new credit
Perhaps surprisingly, Jo advises: “It’s good to have some debt. Just as long as you are managing it, not missing payments and paying off your credit card in full every month.”
Why you should check your credit score?
Problems with credit scores can come up all the time. Whether it’s historic phone bills you thought you had paid or a case of identity fraud, which seems to be on the rise.
“You should almost treat it as part of your financial health,” Jo says. “If there is something untoward on there, you can find out about it and deal with it. Once a mark is there, it can stay there for six years.
“And, if there is a mistake – like you discover you have been a victim of identity fraud – then it can often take months to get it removed. So it’s best to check your score and deal with issues sooner rather than later.”
Jo suggests using Check My File, which takes data from the three main credit bureaus, Experian, Equifax and TransUnion. They offer a 30 day free trial and after that you will be charged £14.99 per month but you can cancel at any time.
Do you have a poor credit rating?
Don’t fret! A poor credit score doesn’t necessarily mean you can’t get a mortgage. It might just mean you need a specialist type which may be more expensive than typical high street options.
Just this month, Jo has helped two clients with credit difficulties to remortgage.
Here’s what they had to say: “Jo Jingree of Mortgage Confidence has literally been a saviour for us. We had made the mistake – like so many – of ‘burying our heads in the sand’ instead of attempting to resolve our nightmare situation.
“We’re a mature couple, with an endowment mortgage and a poor credit history. We found ourselves extremely worried at being in such an intolerable predicament and not knowing which way to turn. We were referred to Jo by a friend of ours and from the outset she was extremely professional, understanding and compassionate.
“Her knowledge, experience and advice has resolved our situation and we are very very happy to report we now have a new mortgage deal and, as a consequence, our peace of mind. Thank you Jo!”
If you’re not sure which way to turn when it comes to getting a mortgage and have have had credit difficulties, why not get in touch with Mortgage Confidence? Jo offers a 30-minute free no-obligation phone consultation.