I have discussed first time buyer information, including hints and tips many times previously, however there is something that crops up on a regular basis. Many people are aware (some are not) that if you have any form of adverse credit such as: default, CCJ, missed or late payments or the reliance of Pay Day Loans, this will affect your overall credit profile and is likely to hinder your chances of being accepted for a mortgage. However, many people are not aware that if you have had little or no credit previously you may also struggle to be accepted for a mortgage as the mortgage lender may still see you as high risk. The reason for this is that there is no proof that you would repay the mortgage should you be accepted for one.

There are ways to overcome this, however I must stress that it is imperative that any credit taken out should always be repaid on time and for at least the minimum payment required. If you are looking to build your credit profile it may be worth obtaining a credit card. In this case you could, for example, pay for your fuel or food shopping on the credit card each month and repay it IN FULL every month, this would mean you have no outstanding debt and you would not pay any interest should you repay the full amount every month. This would show the potential mortgage lender that you are reliable and that you have proof of repaying the credit that you have taken out.

Another point to make is that people often focus solely on their credit score, whereas the focus should be what is on the credit report including any positives or negatives, and then any ways in which you could make the overall credit profile better.

You should think very seriously before you take out any form of credit, any potential issues could have significant financial consequences.

If you are planning to purchase a property now or in the future, it is worthwhile consulting an independent financial adviser to consider your options.

Jenny Ennis Cert CII (MP)
11th November 2019

Building your Credit Profile