How to Improve Your Credit Score for a Better Remortgage Offer
Updated: Aug 8
A good credit score is essential when it comes to securing a better remortgage offer. Your credit score can impact the interest rate, repayment terms, and overall cost of your remortgage. In this post, we'll discuss how you can improve your credit score and increase your chances of securing a better remortgage offer.
Check Your Credit Report: The first step in improving your credit score is to check your credit report. Your credit report contains information about your credit history, including your payment history, outstanding balances, and credit inquiries. You can obtain a free credit report once a year from each of the three credit reporting agencies: Equifax, Experian, and TransUnion. Review your credit report for any errors or inaccuracies and dispute them if necessary.
Pay Your Bills on Time: Payment history is a significant factor in determining your credit score. Late or missed payments can negatively impact your credit score. Ensure you make all of your payments on time, including credit card bills, loans, and utility bills.
Keep Your Credit Utilization Low: Credit utilization refers to the amount of available credit you're using. A high credit utilization can negatively impact your credit score. To improve your credit score, try to keep your credit utilization below 30% of your available credit limit.
Reduce Your Debt: High levels of debt can negatively impact your credit score. To improve your credit score, work on reducing your debt levels. Create a budget and prioritize paying off your debts, starting with those with the highest interest rates.
Don't Close Old Credit Accounts: Length of credit history is another factor that affects your credit score. Closing old credit accounts can shorten your credit history and negatively impact your credit score. Instead, keep your old credit accounts open, even if you're not using them regularly.
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Here are two hypothetical case studies to illustrate the benefits of improving your credit score:
Case Study 1: Sarah has a credit score of 600 and wants to remortgage her home. She's offered an interest rate of 5% and a 20-year repayment term. After following the steps to improve her credit score, her credit score increases to 700. She's now offered an interest rate of 3.5% and a 15-year repayment term, resulting in significant savings over the life of the loan.
Case Study 2: Mark has a credit score of 620 and wants to remortgage his home. He's offered an interest rate of 4.5% and a 25-year repayment term. After following the steps to improve his credit score, his credit score increases to 680. He's now offered an interest rate of 4% and a 20-year repayment term, saving him thousands of dollars in interest over the life of the loan.
If you're looking to improve your credit score, there are a few resources you can utilize:
Credit reporting agencies like Equifax, Experian, and TransUnion can provide you with your credit report.
Credit counseling services can help you create a budget and work on reducing your debt levels.
Credit monitoring services can help you stay on top of your credit score and alert you to any changes or potential fraud.
Conclusion:
Improving your credit score is a critical step in securing a better remortgage offer. By checking your credit report, paying your bills on time, keeping your credit utilization low, reducing your debt levels, and keeping old credit accounts open, you can increase your chances of getting a better remortgage offer. Remember to stay patient, as improving your credit score can take time, but the long-term benefits are worth the effort.
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