House prices are on the rise, according to new figures from both the Halifax and Nationwide, and even though the reported increases are 1.2 per cent and 0.4 per cent respectively, it sounds like bad news for would-be first time buyers.
But the picture isn't necessarily bleak. Although Bank of England data shows that mortgage approvals fell in September, some lenders have reintroduced 90 per cent mortgages, which were common before the credit crunch.
Lenders are also perhaps becoming more sympathetic, while remaining cautious, as a new partnership between the Halifax and Experian CreditExpert demonstrates. Applicants who are turned down for a mortgage because their credit score was not high enough get a bespoke membership of CreditExpert, including access to a team of credit experts who can give them personal advice on how to improve their credit status and, hopefully, the keys to their own front door.
If you haven't got as far as putting in an application yet, these tips could help to get you the score you need.
1. Understand how lenders calculate credit scoresThey take information from the personal history of your credit accounts contained in your credit report, plus details from your application and give relevant items a value, using their own unique formula. The total is your score.
2. Make sure your credit report is accurateGo through it carefully, looking for discrepancies such as different ways of listing your address, and clerical errors, such as duplicate listing of accounts or closed accounts marked as open. Contact the relevant lender about anything you disagree with. It's free to see your Experian credit report with a 30-day trial of CreditExpert (New customers only. Monthly fee applies after free trial).
3. Take a reality checkThere's no point applying if you haven't saved a large enough deposit or don't earn enough to keep up with the repayments without relying on your credit card. Applying to every lender you can find could actually harm your chances. Each application is recorded on your credit report and if lenders see multiple applications in a short period, they could think that you're desperate, or suspect a fraud.
4. Make yourself more attractiveSimple steps can add valuable points to your credit score and make you more attractive to mortgage lenders. Make sure you are registered to vote at your current address, close unused accounts, and add a note explaining if special circumstances, such as illness, caused past problems.
5. Remember, rememberMake sure you make repayments on time, every time a missed or late repayment stays on your credit report for at least three years and could cost you the house of your dreams. Set up direct debits if you're forgetful.
6. Be patientThere's a reason why the average age of a first time buyer is 35; it takes time to build a good credit history, save a sufficiently large deposit and earn enough to take on repayments and running costs. It's worth knowing your credit status; it may well pay off in the long run.
