Credit Scoring in Chippenham - Expert Advice from ACC Associates

Credit Rating and Credit Scoring – ACC Associates’ Mortgage Brokers and Advisors guide to what it is and how you can improve yours

Many mortgage lenders, secured loan lenders and unsecured loan lenders use credit scoring and credit ratings to assist and advise them in making a decision as to whether to accept your application for a mortgage loan – or another form of credit such as credit-cards or mobile phone contracts.

ACC Associates’ mortgage brokers and advisors have access to lenders who use this form of assessment for your mortgage application, such as Santander, Halifax, Woolwich and the Nationwide Building Society (amongst many others) – which can be helpful to both you and the lender in obtaining a decision on your new mortgage. ACC Associates also have access to lenders who do not use credit scoring as part of their decision making on your mortgage application such as Aldermore Mortgages, again, amongst many others – who use sensible underwriting rules and criteria applied by experienced mortgage underwriters. With the help of a specialist mortgage broker and advisor from ACC Associates, we could secure a mortgage for you even though you have been turned down elsewhere. What have you got to lose? If you have been turned down for mortgage lending, why not give ACC Associates a call where we will advise you?

Even though ACC Associates mortgage brokers and advisors have access to non credit scoring lenders, in general your credit score will be very influential in determining your ability to obtain a mortgage, the amount you can borrow and the mortgage interest rate you will be charged – particularly if you are a first-time buyer.

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Feel free to call us on (01249) 599019 to start your search and take advantage of your ACC Associates broker service. Continue reading to learn more about credit ratings and credit scoring in the UK.

What is a credit score and credit rating?

In essence a credit score and credit rating is a snapshot based on a statistical analysis of your credit files, which will represent your creditworthiness in a mortgage application. A credit score and credit rating is primarily based on credit report information, typically obtained from credit reference agencies. When obtaining your credit score, the higher the score the lower risk you are to the mortgage lender. One of the important factors to remember in bearing in mind your credit score and rating is each mortgage lender scores you based on its “perfect customer” wish list. You could find you are declined for one lender such as Santander for no obvious reason but be accepted by another mortgage lender such as Halifax. It is for this reason we feel it is important for you to seek the advice of a qualified mortgage broker and advisor who will advise you on your mortgage needs before potentially inadvertently jeopardising your mortgage application by “shopping around” and lenders creating searches on your credit file without you thinking twice. You can see how mortgage brokers and advisors make a difference to mortgage borrowers here.

How are credit scores and credit ratings calculated?

You will have an individual score which is based on your credit files compared to information patterns in millions of past credit files. By taking into account your past 6 years credit history; in particular the last 3 years mortgage lenders can identify your level of future credit risk and whether you meet their “wish list”.

What are the most important factors to consider? Can I improve my Credit Score and Credit Rating for mortgage purposes?

There are a number of details the credit reference agencies will use in determining what your credit score is. The credit reference agencies can use the following information and all are important to take into account. So ensure, as much as you can, they are in order when you are planning to apply for a mortgage:

	What is it?	What can I do?
The Electoral Roll	This shows addresses you’ve been registered to vote at and the dates you were registered there.	Ensure your name is shown on your correct address. Contact your local authority to check.
Public records	This includes county court judgments, bankruptcies and in England and Wales, Individual Voluntary Arrangements (IVAs), Debt Relief Orders and Administration Orders.	Keep a note of what you have, how much it was for, the specific dates and any special circumstances you think would help to explain them. Keep any certificates of satisfaction safe.
Account information	This shows how you have managed your existing accounts such as your bank account, mortgages, loans and credit-cards. It shows lenders whether you have made payments on time or have fallen into arrears.	Ensure you pay bills on time (particularly your mortgage or rent) – even if it’s a minimum payment on a credit-card where you can often setup a direct debit for the minimum payment each month or a set amount you may wish to decide upon. It can be useful to have a credit-card for example to pay for some items and then pay them off each month as this will help build your financial picture in the eyes of mortgage lenders. However having too many credit-cards could lead to mortgage lenders becoming concerned that you have too many “open” forms of credit. For this reason, it may be worthwhile for you to close credit/store card accounts down if you have a large number that you are not using – we would suggest writing to the provider and requesting to close the account down and ensuring you obtain a letter from them confirming they have closed your account/s down.
Home repossessions	This is information from members of the Council of Mortgage Lenders about homes that have been repossessed.	There are often reasons that lead to your home being repossessed. Keep records and financial documents relating to the repossession.
Financial associations	This shows details of people you are financially connected to. For example, it includes people you’ve applied jointly for a mortgage or other credit with or who you have a joint account with.	Details of people you are not financially linked to can be removed from your record.
Previous searches	This shows details of companies and organisations that have looked at information on your file in the last 12 months.	You may think you are doing the right thing in shopping around for a mortgage to find the “best deal”, however if you meet with your local high street mortgage arrangers available at banks and building societies, you may find you have four or more mortgage credit checks completed on you in a short period of time. This could have a negative affect on your mortgage credit scoring and credit rating – it is for this reason we recommend you speak with an ACC Associates mortgage broker and advisor where we will explain the right approach for you to find the appropriate mortgage for your needs whilst ensuring you are not damaging your credit worthiness.
Linked addresses	This shows any addresses you have lived at.	Check that you have not been incorrectly linked with any addresses.
Up to date information		Particularly for first-time buyers we recommend you obtain a credit report on yourself in the first instance and ensure all the information held on you credit file is up to date. For example you may have received a county court judgement and paid it sometime ago, however is this showing on your credit report? By obtaining a credit report upfront it can help avoid disappointment and the loss of money potentially should you be unable to obtain a mortgage once you have paid solicitors fees etc.
Income details	Pay your income into your bank account.	Most of us have our income paid straight into our bank current account each week or month. However if you are paid in cash we would suggest you pay this into your account when you are paid – as it will help illustrate your income to mortgage lenders – particularly if you are not receiving payslips each month.

If there has been any fraud against you, for example if someone has used your identity, there may be a marker against your name to protect you. You will be able to see this on your credit file.

To obtain the details held on your credit file click here.

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Why do mortgage lenders use credit scores and credit ratings?

Credit scores and credit ratings provide a reliable and valuable guide to future risk based solely on your credit report to date. As mentioned above, the higher your score the lower the risk the mortgage lenders will view you when making a decision on lending to you.

Does everyone have a credit score and credit rating?

Yes, anyone who has had some form of credit – even a mobile phone or a current account at your bank will have a credit file. For a score to be calculated on your credit file, the file must contain at least one account that has been active for six months or longer. In addition, the report must contain at least one account that has been updated in the past six months. This ensures there is enough recent information in your report to calculate an accurate score.

How often does the score change?

Your credit file is continually updated with new information from your creditors and companies you have applied for credit. One thing to bear in mind is if you pay an overdue bill today or have a dispute amended in your favour this may not necessarily show up as cleared immediately and may take a month or sometimes longer for this information to show correctly.

Your next step to receiving mortgage advice from an ACC Associates mortgage broker and advisor

Feel free to call us on (01249) 599019 to start your search and take advantage of your ACC Associates mortgage broker service where you’ll receive advice that suits your needs.