8 occasions your Credit Report can help when moving house

Posted by Jamie Mackenzie Smith in Credit Reports on 29 December 2017

For many people, the first time they pay close attention to their credit score is when applying for their first mortgage. As a result, some consumers find themselves being declined for the simple reason that they haven’t built and maintained a good credit history leading up to their mortgage application - something that could reduce the chances of getting accepted for any type of finance.

This usually comes as a shock, since they may have never faced any financial difficulty in their adult lives. The truth is, it’s not just the presence of a bad credit history that can ruin your chances of getting accepted for a mortgage, it’s the absence of any type of credit history at all. Unless you can prove that you’ve managed credit in the past, you might not have much to bring to the table to prove you’re a good borrower.

Until you’ve checked your credit file, you won’t really know how a prospective lender might rate you, but there are plenty of chances when you can use the information it contains to your advantage if you’re thinking about becoming a homeowner.

1. Building your credit file while renting or living with parents

Building a healthy credit rating while in rented property isn’t easy, but it can be done if you’re willing to put in a little time and research:

Using rent reporting agencies

Unless you’re moving straight into a home right after living with your parents (in which case, congrats) you’ll probably end up spending a few years in rented accommodation. Counterintuitive though it may seem, even if you have many years’ spotless rent payment history, it probably won’t have improved your credit rating a jot.

Unless you’re enrolled in a rent payment scheme (and few people are), most letting agents or private landlords won’t report payments to credit reference agencies, so being good and paying in time each month will count for nothing. Even if you are enrolled in such a scheme, most only report rent payments to one credit reference agency, meaning that if you apply for a mortgage with a lender that doesn’t use the agency of the rent reporter’s choice, you won’t get any of the benefit.

Credit cards to build your score

Because paying your rent on time probably won’t have a positive effect on your credit rating, it’s a good time to look for things that might. Getting and starting to use a credit card now is a good way to begin to build up that file, where making payments on time each month will start to quickly demonstrate that you can ‘manage’ credit.

Not all cards are created equal, and some offer unquestionably better perks (like cashback, air miles etc.) and lower APRs. This is where the downside of credit building with a card comes in: you can’t get the best cards without a good credit history. Getting a card now, even if you only use it sparingly, could be a big help further down the line, but you’ll want to check your credit file before applying. Especially where you don’t have a record of managing credit, a lender will want to make sure you are on the electoral roll and that your file is free of court or fraud information.

2. Getting a mortgage offer

Use this time to remove some of the mystery from your mortgage application by making sure your credit file is showing all the information that lenders want to see. Then you can test to see if your hard work has paid off also by treating your agreement in principle as a trial run to find out if lenders like what they see.

Check all your info is up to date

Making sure all the information on you is present and correct is a powerful first step to an easier house buying process later along the line. Depending on what amends need to be made, it can often be months before you see the change reflected on your report. Additionally if you have any defaults or CCJs on your file that are due to come off automatically soon, waiting for them to be removed should make your application go that bit smoother.

Keep an eye out for these things in particular, because lenders certainly won’t miss them.

  • Late payments or defaulted accounts
  • CCJs or other court information
  • Not being listed on the Electoral Roll with all four credit reference agencies
  • Any Financial Association

Get an agreement in principle

An agreement in principle represents the first big search of your credit file when you’re buying a house, so it’s important to make a good impression. Getting an AIP doesn’t 100% guarantee you a mortgage, but it will give you a much clearer indication of whether you’re likely to be accepted based on your credit history.

Look at a few, good mortgages rather than applying to every single one to see which will take you. If too many lenders carry out a hard search on your file it can look like a sign of desperation, which could put off mortgage lenders. Play it cool and don’t give the impression you need that mortgage more than you actually do.

Contrary to popular misconception, there isn’t a minimum credit score that lenders look for before accepting a mortgage.

Think twice about a sudden career change

Now would not be a good time to switch jobs, even though it can be a hard thing to have much influence over. If you don’t have a payslip from the new job proving your new income, you might struggle to get the mortgage lender to agree to your mortgage, even after they’ve given you an agreement in principle. Stability is important to lenders – the longer you’ve been in your job, the better.

3. During the purchase

The period between being accepted for a mortgage and being handed the keys is as stressful as it is relieving; on the one hand you’ve passed most of the checks and the move-in date is drawing nearer, but you’re not out of the woods yet.

Bankruptcy check

Usually the day before you are set to receive the keys for your new property, you will get a call from your solicitor effectively saying “just wanted to check you haven’t been declared bankrupt lately.” This is completely normal and nothing to be startled by. This is usually left to the last minute to make sure there have been no changes to your circumstances before you enter a legally binding agreement with the lenders.

Sometimes solicitors will even have to verify that another person sharing your name that has been declared bankrupt is not in fact you. It’s rare, but if this does happen, it’s usually just a case of signing a declaration to say it is not you.

4. Upon Completion

Once you’ve completed, it’s natural to want to take a break from anything to do with money for as long as possible. The reality is however that you need to start thinking about your first mortgage payment, which comes soon after the key hand-over. The first mortgage payment is usually a little higher than the average monthly payments that follow, so make sure you are prepared for this.

Make sure you’ve got a bit of extra money set aside for the completion phase: stamp duty and VAT on top of the purchase price and estate agent’s fees are an additional cost and you don’t want to get caught short.

A final check is likely to be carried out at this point, so don’t be tempted to apply for finance to buy things to fill the new house until you have the keys in-hand. The last thing you want to do is have the lender questioning your creditworthiness this close to completion. You can check your credit file yourself at any point for peace of mind though, and checking won’t affect your credit rating, no matter how many times you look.

5. Changing address – protecting yourself against ID fraud

You’re finally in your new home, but that doesn’t mean you can forget all about your credit report -– in fact, it’s a vital time to check again, to make sure that all your credit accounts have followed you to your new address. It’s a quick and easy way of making sure you’ve informed everyone that matters most, though bear in mind it can take a while for the update to be reflected on your credit file, so it’s best to simply monitor it carefully for a while.

Though the risk is very small, you may be more prone to identity theft after moving house unless you tell every credit lender, utility provider, bank and company you have financial agreements with that you have moved house. Until you’ve informed all the relevant parties, sensitive information could be posted to the wrong address and potentially fall into the wrong hands. Redirecting your mail is an essential part of the moving process and the earlier it’s done, the better it will be for your security. As a modern alternative, you could even consider digitising your post and viewing it online with ScanMyPost.co.uk.

One of the worst things about identity theft is that you often won’t know you’ve been a victim until after it’s happened. Checking your report routinely will help minimise the risk, and all checkmyfile customers benefit from free Identify Fraud Assistance, should they fall victim.

6. Updating your electoral roll listing

Making sure you’re on the electoral roll is one of the simplest, yet most effective things you can do to improve your credit score and the way lenders see you. While it seems like there might not be any connection between the ability to vote and your finances, lenders see it as a key factor in proving you’re safe, secure and stable as a customer. The Electoral Roll is essentially the hook upon which most other data hangs.

Being registered to vote in elections is only the first step, and if you’ve registered specifically with your credit file in mind, you’ll want to be sure it’s being reported by all four credit reference agencies. This is why it’s recommended you check your credit file to make sure all the agencies are showing you as registered to vote at your new address.

How long does it take to update?

The electoral commission runs a rolling register throughout the year which usually updates at the start of each month, provided you apply for any changes to take place by mid-month, your updated information should appear when the register is next published.

There is often some admin time required by the reference agencies (on top of the time it takes for the register to be published), so it can take around a month for the update to appear on your credit report.

If you’ve definitely registered, but you’re still not listed at your current address on your credit report after a couple of months, you should chase things up- the first step being to contact your local Electoral Registration Officer.

7. Getting a credit card for furniture and necessities

Once you’ve finally moved in and the seemingly constant outflow of money has finally stopped, the thought of further spending might fill you with dread. Used in the right way though, a carefully considered credit card can help you cope with the inevitable extra expense that comes with moving into a new house such as furniture, at the same time as further enhancing your credit score.

Re-mortgaging will seem a long way off, but when the time does come around, you can’t hurt your chances of securing a good deal by making your credit rating a bit more robust.

It might be a matter of careful timing again, to ensure that (as explained earlier) you get listed on the electoral roll, but once that is all in place, you should be able to apply with confidence.

8. Remortgaging- how your hard work pays off

Fast-forward a few years down the line and you might be thinking about re-mortgaging your home, either to get a better rate or because the introductory mortgage rate is about to end. Either way you don’t want to end up paying more than you have to.

This is where all your hard work up to this point really starts to pay off. If you’ve been keeping up with mortgage payments and maintaining a healthy credit file there’s no reason mortgage lenders wouldn’t want you as a customer, and be willing to offer you the best rates at your Loan to Value (LTV) as a result.

Does that mean you never need to look at your credit file again? Well, no. You’ll still want to make sure that all that hard work getting your credit file into shape doesn’t unravel, and that your credit rating stays as strong as it can be – free of errors and a glowing endorsement of your ability to manage credit.

If you haven't already, you can try checkmyfile FREE for 30 days , then for just £14.99 a month afterwards which you can cancel at any time. You'll get complete access to the UK's most detailed credit report, with information from 4 Credit Reference Agencies, not just 1.

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