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How to increase credit rating.

Gill77
Posts: 16 Forumite

Max, my 21-year-old serving police officer grandson, wants at some point to buy a flat. What is the best way for him to improve his chance of a mortgage? I thought I would ask you lovely people. Thank you
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Credit rating/score on Experian/Equifax/TransUnion is not important, the information on the each report is. Lenders use that information to do their own internal scoring (which customers don't see) they don't use the credit scores provided by the credit scoring agencies.
Tell him to review his three credit reports. It can be don't for free. Make sure all the information is correct and up to date. If there are any issues it can take a while to resolve so it's good to keep an eye on them, not just check the night before a mortgage appointment.
For Experian use MSE Credit Club
For Equifax use Clearscore
For TransUnion use Credit Karma
How to improve his credit history- Register to vote at his current address
- Get a credit card, keep balance to about 30% of the limit. Use it frequently. Pay it off in full every month on receipt of the statement. At the very least had a direct debit set up to pay off the minimum amount.
- Having a phone on credit is shown as a credit account.
- Savings and rental payments do not appear on a credit report. Council tax doesn't either. Some utility companies report but not all.
- Avoid frequent use of an overdraft
- Don't touch pay day loans
- Have direct debits to avoid missed payments. A one off missed payment isn't that bad. A default can be very bad. A CCJ is can be very bad.
- Avoid too many credit applications Too many hard searches in a short space of time make it looks like he's desperate for credit. He can have an many soft searches as he likes, make no difference. Use eligibility checkers before applying for credit (make sure they say they don't leave a mark).
- Don't apply for credit in the 6 months leading up to a mortgage appointment and certainly don't apply between the application and completion of the house sale.
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Some other points that have come up recently.- Gambling doesn't look good on bank statements- Gambling on credit cards is definitely a no-no (although it's supposed to be banned)- Lottery is apparently OK if it's a couple of quid here and there0
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Excellent advice given already. Just to add what I do as a 30 something years old person.
Spend within your means.
I avoid buy now pay later for unnecessary things.
Bills such as phone contracts ensure you keep up with repayments even if you want to end the contract contact the company, do not just stop direct debit payment.
Be careful with your personal details safely dispose letters, shred them.
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Thank you all so much, you can always get the best advice on this forum.
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