As we mentioned in one of our previous blogs ‘What documents will I need when applying for a mortgage?’ we advised obtaining a copy of your credit report before applying for a mortgage. This is so you can accurately calculate how much money you can afford to borrow and also eliminate any delays further down the line that could arise from having a discrepancy on your file.
This week Experian published an interesting article about the top 10 myths of credit. We have highlighted some of the points we found interesting and that should be considered prior to applying for a mortgage.
The first myth is that items in your credit history stay on file forever. Credit reports are designed to give lenders a good picture of your current situation so any issues in the past are irrelevant. Most information about your credit history is therefore held for around six years.
The next interesting myth is that friends and family living in your home affect your credit rating. The only people who can affect your own credit rating is people who you have a financial connection with such as being on a joint mortgage. Living with someone is not a financial connection.
The final myth is that it doesn't matter how many credit accounts you have. Lenders want to be sure that you can afford more credit, so they prefer it if you don't already owe large amounts on multiple accounts. They can also favour customers who aren't heavily reliant on the credit they already have. So try to keep your regular borrowing on cards to less than 25% of your credit limits if you can.
To see the full list of the top 10 credit myths go to http://ex.pn/1l27VsL.