As we all know, as I don’t shut up about it, we are hoping to buy a house together sometime soon and in order to get a mortgage, I’m going to have to make sure I’ve got a credit score. Much to my surprise I never realised how tough it was to get a mortgage approved when you haven’t proven you’re able to pay off monthly bills, used a credit card or never even had a loan! I’ve also never rented a place to live and this doesn’t go in my favour!
I’ve heard so many stories recently of people being declined a mortgage because they’re too careful with money! Can you believe that?! So I’m going to clear up a few of those myths about how to get a good credit score and keep it there!
One of the first pieces of advice I was given when I mentioned I’d be looking to get a mortgage was to get a credit card and use it, but make sure I could pay it off each month. With this in mind, I did some research, picked the card that suited me and now I use it for when we travel; I book flights on it, I book hotels on it and I use it when we are abroad as I don’t get charged a commission rate. I also have it set up so that it’s paid by direct debit each month to save having late payments.
Believe it or not, this could actually work in your favour if you have previous debts as it can help you consolidate them all to one place and one payment. As long as you’re able to pay it back and you look into loans online so you don’t end up paying a huge amount on interest. Paying back your loan is just like any new credit account; you need to make sure you’re making your payment on time every month as this is critical to maintaining a good credit score.
For the first time, I’ve started to use the finance options for slightly bigger purchases, but ones I know I can happily pay off monthly. One of them being the carpet we bought for the flat which comes to an end in April but will still be on my records for when we mortgage hunt. My most reason item I popped on finance was my camera insurance, it’s only £20ish a month but I wanted to still have a little finance in my name for the few months once the carpet had finished as I’m being overly conscious about having my mortgage declined!
A few other tips are to make sure your phone bill is in your name and the same for your car insurance if you pay this monthly too. I’d also start a spreadsheet so you can keep track of your monthly planning so you know how much you can afford to spend if you do open a credit card account or make a purchase on credit.