Top tips to help build your credit ahead of help to buy

Having a bad credit history can make it much harder to get a mortgage and the process of successfully obtaining one starts well before you begin your property search. For those who are not in a financial situation to save a large deposit, a Help to Buy mortgage can be the ideal solution to owning your own home.

The Governments Help to Buy scheme is designed to assist those who are looking to get onto or take their next step on the property ladder, but are struggling to save the necessary deposit.

In order to be a suitable candidate for a Help to Buy Loan you must;

Being accepted for a mortgage can be difficult process, even for those with good credit, however all is not lost if your credit rating is less than desirable.
Due to the 75% LTV mortgage from which lenders base their decisions, the government equity loan plan allows them to be more flexible with their underwriting terms. Consequently, they are able to offer more favourable terms as a result of the lower risk and overall, more appealing prospect of you as a buyer. Specialist lenders are also more likely to consider loaning to buyers with adverse credit and can offer a mortgage where others cannot.

The first step to owning your own home with the Help to Buy scheme is to figure out your finances and take the necessary measures to improve them in order to secure a mortgage in the future. Here are a few tips to help you build up your credit.
Get a Credit Report
If you do not have one, it is important to get an up to date credit report from one of the two credit bureaus – Experian or Equifax.
Fix Past Mistakes
Errors on credit reports can lead to a mortgage being declined and so it is important to spot them and file the necessary claims needed in order to help rectify them. This can be done using the step-by-step guide on any of the credit bureaus websites.
Keep Everything in Check
As important as it is to improve your credit score over time it’s just as important to ensure that you do not add to the issue by ensuring that all bills and payments are made on time and never missed.
Pay More on Revolving Credits
An often-advised credit building tip is to always make more than the minimum payments each month. Only paying the minimum each month is not a positive indicator, however, paying more than the minimum even by just a little is a sign to those reviewing your credit report that you are reliable and have good finance management. It also provides the added bonus of helping you to pay off your balances faster and reduces the amount of interest paid to the bank.
Maintain Low Card Balances
It can help to avoid carrying a balance over 50% of the limit on each card and lowering these debts to under the halfway mark as soon as possible can be of great benefit.
Avoid Big Financial Changes
Before applying for a mortgage, it is best to put off any big financial purchases that could put a dent in your credit score which includes things such as buying a car, obtaining a new loan and large credit card purchases.
Stay Put
People are often tempted to shift between credit cards in order to attempt to reduce balances but it’s best to pay off the debt on your existing cards and avoid moving to a new one. Credit card companies have caught onto this and although they will let you move, can charge hefty fees which make the move not financially worthwhile.
Plan Ahead
Improving your credit score is not something that happens magically overnight, it takes time. It is therefore important to get a head start on things as soon as possible before looking to secure a mortgage.
Seek Advice
It is always beneficial to seek advice from a professional mortgage advisor who has experience in dealing with Help to Buy with Bad Credit mortgages. They will be able to offer invaluable support and guidance, as well as having relationships in place with specialist lenders who are more likely to accept those with a less than perfect credit score.