Mortgages

What steps do homebuyers take to improve their credit rating?

13% say they would consider entering a debt management plan.

Rozi Jones
|
26th November 2019
Credit score report application paper
"People who have experienced credit problems in the last three years have concerns about applying for a mortgage and are willing to make a number of sacrifices in order to buy a home."

41% of adults with adverse credit who plan to buy a house in the next 12 months expect to cut back on recreational activities to improve their credit rating before or during the application process, according to research from Pepper Money.

The survey questioned 600 people who have experienced credit problems, including missed payments, CCJs, defaults, unsecured arrears and secured arrears, in the last three years.

A third (33%) of adults who have experienced adverse credit in the last three years say they will pay off their credit cards to improve the credit rating before applying for a mortgage. 32% say they will ensure all bills are paid on time and 27% say they will reduce their mobile phone contract.

More than 1 in 10 (13%) people in this situation say they would consider entering a debt management plan.

Paul Adams, sales director at Pepper Money, said: “It’s clear that many people who have experienced credit problems in the last three years have concerns about applying for a mortgage and are willing to make a number of sacrifices in order to buy a home. Cutting down on spending may have little impact on their credit score, however, and customers in these circumstances might be better off speaking to a broker about their options in the specialist mortgage market.

“A good specialist lender will use experienced underwriters to make its decisions, rather than a credit score, and will be able to look more closely into a customers’ circumstances to make an expert assessment on their ability to make payments on a mortgage in the future, even if they have experienced credit problems in the past.”

 

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