Regulation in the mortgage market has continually been tightened and restricted ever since the MMR last year. As a result, there is more emphasis on credit history than ever before.
Your dream home, or re finance for that much-needed extension, could be at risk if your payment history is not up to scratch.
Surprisingly, accounts such as utility bills, mobile phones, and TV packages all appear on your credit file and are scrutinised by any perspective lender. Sadly, contractors are having loans reduced or declined due to ‘minor’ marks on their report. ‘Falling out with a mobile phone company 4 years ago’ where a bill was in dispute or ‘I keep forgetting to pay my credit card instalment on time’ could come back to haunt you when you come to securing funding.
These misdemeanours are no longer over looked as insignificant when applying for a loan of hundreds of thousands of pounds. On the contrary, if you are late paying your £300 credit card bill the lender will not be filled with confidence when offering a loan with repayments over a 25-year period.
Before 2009, these accounts would not appear on your credit file. However, more companies are using credit agencies such as Experian as a preventative measure to ensure all their customers pay on time. The consequences of falling behind with a payment, be it accidental or a dispute, can cause serious problems when applying for a mortgage.
Your credit file shows a historical record of the last six years, and no matter what you do you will be stuck with it until year seven.
As this is such a key area of the mortgage application process, there is now a new scheme to help tenants boost their credit profile. You can opt into the Experian scheme so that all your monthly rental instalments are recorded. If you pay on time the account will show as well managed, boosting your score and profile.
In order to take part in the new scheme, the Landlord will need to give their consent. An excellent idea if you are a consistent and reliable bill payer, or someone look to repair their credit file. In a world of increased regulation, don’t get caught out by the banks!
Article By: Jon Hatfield, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Ratchelle Deary, Public Relations Manager
Tel: 01489 555 080