"The credit market is certainly very different from how it was 12 months ago. Today, banks require deposits of at least 25% for mortgages and will look very closely at earnings for proof that an individual can afford a new loan. Just one missed payment on an individual’s credit file can also have a negative impact on their credit rating – either meaning they won’t get a mortgage at all or certainly won’t get the best possible rate.
"It may be tempting to stretch the truth on a mortgage application, but with all the cross-checking that is done by lenders, any anomalies will be found out. At the very least, the application refusal could work against someone’s credit score, but worse, a lender could decide to prosecute if they feel that a fraudulent application has been made and this could have a serious impact on an individual’s ability to get credit in the future."
Munroe said: "Our advice is to be completely honest on an application. If there have been missed payments on previous credit agreements it’s always worth explaining these to the lender when making the application. And there’s the facility to provide information about this on the credit file as part of our Notice of Correction service. This enables an individual to add an explanation of circumstances that may be adversely affecting their ability to obtain credit.
"Consumers should never twist the truth on applications. They will get found out and it could impact on their lives far into the future. We advise people to get a copy of their credit file and do everything they can to improve their credit rating before applying for credit – it’s the best way to get a good deal in difficult times."
Equifax’s Top Tips for Improving Credit Ratings & Good Credit Management:
1 Ensure you are registered on the Electoral Roll;
2 Close old credit card accounts – even if they show a zero balance lenders will look at the potential credit available when assessing applications;
3 When shopping around for credit ensure that the lender logs the inquiry as a "quotation" (soft) search, rather than an "application" (hard) search;
4 If possible make more than the minimum payment on credit agreements every month. You will benefit by paying back your debt quicker, paying less in interest and you will build a positive payment history;
5 If you have paid any County Court Judgments, make sure the settlement is recorded on your credit file. If not contact the court to get confirmation details and inform the credit reference agencies;
6 If you have been refused credit, obtain a copy of your credit rating. But DO NOT carry on applying elsewhere. Each search by a lender will leave "footprints" on your credit file; this may look like you are over-stretching yourself financially;
7 If your circumstances have changed then say so. You can place a Notice of Correction on your credit file explaining your financial situation, which a lender will review when accessing any credit applications you make. For example if you were made redundant or have recently divorced and have fallen behind on credit repayments;
8 Avoid carrying a balance that is more than 30% of your credit limit (creditors may view it as excessive debt and that you may not be able to keep up with repayments).
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