NR Finance – Advice and tips for the nation

Checking out your credit report is a very important step before applying for any sort of credit or finance – understanding how your financial circumstances currently stand and are viewed by prospective lenders will give you a good indication whether you are likely to be accepted for that loan or – if your credit score is poor – if you may be doing yourself more harm than good by applying.

So why are they so tricky to comprehend? Well worry no more – as this article will attempt to help you make sense of your credit report and get you well on your way to credit score comprehension.

Public Information

This section details whether you have any CCJ’s (county court judgements), bankruptcies or insolvencies against your name. It shouldn’t be a surprise to you if you do have any of the above – but the presence of any of these can negatively affect your credit score.

CIFAS

CIFAS is a leading UK fraud detection agency and help to detect identify fraud. This section of your credit report doesn’t actually impact your credit rating – but does serve to identify you if there is any suspicious activity going on related to your address, and as such, whether you may be at risk of identify fraud.

Short Term Loans

This section highlights whether you have any open or closed accounts with short term lenders. As with any loan, the use of short term loans could negatively impact your credit score if repayments are not met.

Financial Connections

Highlights any people with whom you have a financial connection. For instance, if you and your partner have a current account in joint names then that is a financial connection, and if your partners credit score is poor then that can impact your own score. If there are outdated financial connections here, then you can request for these to be removed.

Electoral Roll

This section shows whether you are registered on the electoral roll, the address at which you are registered and the date since you were registered. Lenders like to see borrowers on the electoral roll as it confirms that you are who you say you are and you live where you say you live and therefore protects them scammers trying to commit fraud or steal an identity.

Search History

Shows a list of all credit searches made against your name. There are two types of searches hard searches and soft searches. Hard searches can be seen on your report by anyone who has access to search credit files. Soft searches can only be seen by you. Too many hard searches within a short space of time can negatively impact your credit score.

Notices of Correction

If you choose to, you can add notes to your credit file to try and explain any abnormalities – these are called notices of correction. They won’t result in the abnormality being removed, by can help to provide and explain any extenuating circumstances.

Address Links

Provides a list of previous addresses that have you have been associated with. Normally, this is just a list of you past addresses. Lenders typically like to see long, unbroken stays at each address as this suggests a level of stability. A large list of addresses with very short stays at each might indicate that there were financial issues that caused you to be unable to stay at a single place of residence for any extended period of time.

Financial Account Information

Provides a list of all your recent financial accounts, both those that are still open and also those that have now been closed. This list will include bank accounts, credit cards, phone bills, utility bills, mortgages and more. Lenders look at this to understand your current level of debts and whether you are keeping up repayments on all of the credit you have taken out. If you have a number of accounts that are marked as having money owed, then this could cause your credit score to be negatively affected.

Hopefully this list has helped to explain some of the sections you see on your credit report and taken the mystery out of the credit score somewhat.

One of the most exciting times in anybody’s life is the day that they purchase their first home, collect the keys and move in. But it can be a long road to get there and we all know that even getting to the stage where you have saved enough to start thinking about mortgages, can be a long, long slog.

This post aims to give you some practical tips that can help you save that deposit and get on the property ladder.

How much do I need?

The very first question to answer before we even start to look at how to save, is ‘how much do you need to save for a deposit. Typically, at the time of writing, 5% of the purchase price is the minimum you will need as a deposit.

On the average UK house price for first time buyers of £212,473 – that would be £10,624. Realistically you could probably find a suitable house of much lower value to reduce this amount – but even so, if you can save more than 5% then you are going to be able to access better mortgage deals.

Saving tips

Saving up such a large amount of money can feel like an insurmountable challenge. Here we offer some tips to make the process easier and more effective.

#1 – Work out how much you can afford to save

Even with the greatest will in the World, if your available income after expense each month is £500, you aren’t going to be able to save £600 per month – the number just don’t stack up.

Instead you should set yourself a realistic savings target for each month. Work out your disposable income after all of your expenses – and be ruthless here. There is no point pretending that your expenses are lower than they are as you will only be cheating yourself. Once you have your disposable income, decide how much you are going to be able to put to one side to save for your house deposit, without detrimentally impacting your day to day life.

#2 – Ensure you set up a standing order

Probably the best way to ensure you don’t spend the money you have earmarked for your deposit, is to transfer it out of your account as soon as it is paid in.

You can set up a standing order to move your deposit money straight out of your current account on payday, and straight into a savings account. If the money is less accessible then you may well be less tempted to spend it on a night out or on a shopping spree whim.

#3 – Take advantage of government incentives

A Lifetime ISA may be exactly the extra help you need to get on the property ladder.

With a Lifetime ISA you can save up to £4,000 per year – and the government adds 25%. This means that for every £4,000 you save, the government chips in £1,000 of free money. It’s a no-brainer.

There are some restrictions on who can open a Lifetime ISA – you must be aged between 18 and 40 – but if you qualify, then you can learn more about it here.

#4 – Reduce your outgoings

Obviously, the more you don’t spend the more you will have available to save. There are various ways you can cut down your expenditure (make your own lunch, reduce any unnecessary subscriptions you pay for, etc etc) but if it is an option, one of the most dramatic ways you can reduce your expenditure is to move back in with your parents.

This won’t be for everyone, and it won’t be a viable option for everyone – but with the average UK rent exceeding £750, even if you still contribute to the housekeeping, moving back with the parents could help cut this figure significantly.

#5 – Keep positive

It may be hard in the short term and you may have to give up a couple of luxuries in the short term – but if you stick to your savings goal then you will have a clear date at which you will reach your target, and that first home will be in touching distance. Good luck!

How to Understand Your Credit Report