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Credit Score

How does my credit rating affect the amount of money I can borrow, and what factors will influence my credit score?

Different lenders use different criteria in order to determine how much capital they are prepared to release for borrowing, whether it is in order to buy a house, for a personal loan, overdrafts or credit cards.

These factors may include your credit history, how long you have stayed with your employer, or at your current address; your income, your job type, your age and relationship status.

If your credit rating isn't up to scratch you may find you're turned down for a mortgage. If you are concerned about this, there are a number of steps you can take to improve your credit score.

1. Get on the electoral register - This is used by lenders to check you live where you say you do. Stability is good so if you've been in the same property for a number of years, this will work to your advantage.

2. Check your credit report - You can do this by applying for a free 30-day trial from Experian or Equifax - just remember to cancel your membership once the 30 days comes to an end. Alternatively, both of these credit agencies offer a copy of your credit report for £2.

3. Correct any mistakes - If there are any errors on your credit report, get them corrected immediately. You can contact either your bank or a credit reference agency who will inform your bank for you. You can also add a 200-word statement called a 'Notice of Correction' to your report to explain the situation. Your credit reference agency should be able to help you do this.

4. Limit your applications - If you get turned down from one mortgage lender it can be tempting to apply to another one immediately. But be very careful about doing this. Every time you apply for credit it leaves a 'footprint' on your credit report - if there are a lot of these in a short space of time, lenders are less likely to lend to you as they may feel you are overstretching yourself financially. To avoid this, ask for a quotation to find out what sort of offer you will get before completing your application.

5. Close dormant accounts - If you have a credit card or overdraft you are no longer using, close them down. Large amount of credit may prevent lenders from giving you more.

6. Don't miss payments - If you have credit already - such as a credit card - don't forget to keep up with your monthly repayments. If you are continually missing payments, this will go against you and your credit rating.

Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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