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Closing the Luxury Gap

In a starter flat but need more space? Don't let your credit rating be a barrier to moving on up. The credit experts, Experian, have some advice.

There’s been a lot of talk lately about how people are finding it increasingly difficult to trade up from their starter flat once they have a family and need more space.

In London, the price difference between a two-bedroom flat and a three-bed house now stands at over £135,000, which leaves many families with the ‘choice’ of having to stay put or else move lock, stock and barrel to a different community in a different area. Closing the gap can be quite a challenge, and so one thing you’d want to get right is being accepted for the mortgage to suit your situation. And your credit score could be the key to getting the best mortgage deal.

When you apply for a mortgage, your lender takes the information on your application form, along with the information in your credit report. They give relevant items a value, using their own unique formula, and the resulting figure gives you a credit score. It’s worth remembering that different lenders give different credit scores, because they have different past experiences and expectations, and take various factors into consideration and score them differently. And the same lender may score a mortgage application differently to the way they would score a credit card.

Generally speaking, the higher your credit score, the better your chances. So it’s important to get your finances in the best shape possible in advance of your next mortgage application – not only to get accepted in the first place, but to try to get the best rates and deals possible. Ensuring that your mortgage application gets the highest credit score possible can make a difference of hundreds of pounds a month, and thousands over the course of the mortgage’s lifetime.

The Experian Credit Score is a guide to help you understand your credit report, and how your credit history – ie: the way you’ve managed credit accounts in the past – can have an impact on future credit applications. It can also help you monitor your progress as you get your finances into shape before you next apply for credit.

There are plenty of things you can do to improve your credit score, such as making sure payments on credit cards and loans are all up to date, which can give you an even better chance of getting the best mortgage available. Missed or late payments stay on your credit report for at least six years, and it can have a big impact on whether lenders will accept you or not, as they want to make sure you’re able to pay it back before they agree to give you credit.


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