I have already got a good deal on a mortgage, I won’t struggle to get another.
Unfortunately, this isn’t necessarily true. If you’ve had your mortgage a while, for example, you’re on a 5 year fixed rate, and have made some financial mistakes since you first took it out, you could find that you’re no longer offered the best deals.
That’s because these financial mistakes may negatively impact your credit rating. And a poor credit rating means you don’t normally get access to the best deals out there.
We probably don’t need to tell you just how important it is to meet your monthly mortgage repayments. And you probably already know that it’s just as important to meet any other credit agreement payments you have too, whether it’s credit cards, loans or even a mobile phone contract.
Doing this on time and in full every month is one of the best ways to maintain or even improve your credit rating.
And, like we’ve said, the better your credit rating, the better deals you’ll have access to when your current one runs out.
Why your credit rating is so important
Think of it as being a bit like online dating – you want to know at least something about the person before you commit to going on a date with them, so it’s good to have a good snoop through their profile and pictures first. This lets you figure out whether or not you’ll be a good match and will have something to talk about other than the weather (hopefully anyway!)!
Likewise, checking your credit report lets lenders have a look at how you manage your finances, including your current mortgage repayments, before they commit to lending to you, so they don’t get any surprises.
So, when you apply for a new mortgage deal, the lender will firstly look at your credit report. It shows them your personal details, all of the other credit agreements you’ve taken out over the last six years, as well as how well you’ve managed them.
If they can see you’ve made them all on time and in full, they’re more likely to lend to you.
If they look at your credit report and see missed payments, you’ll look like more of a risk to them, and they may say no, or offer you a less preferential rate.
Before you look for a new mortgage deal
Like you will have done when you first applied for your mortgage, it’s a good idea to check that your credit report is all in order sooner rather than later.
- all of your credit agreements and repayments are listed correctly
- you’re registered on the electoral roll at your new address – you can do that here
- you only have relevant financial connections on your report – find out more here
- you explain any defaults or any other negative marks on your report – read about that here
You should really do this a good few months before you’re current deal runs out, so you have time to get anything that may be wrong corrected.
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