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Seven tips to improve your credit score

If you are considering applying for a loan or have previous credit commitments, your credit score comes into play. Maintaining good credit is essential so that you can get loans or mortgages when you want them. Your credit rating affects how much you can borrow, but it can also affect the deals you qualify for.

Your credit score

When you take out a loan, credit card, or another type of credit, your credit score is used to determine if you are eligible. The information held on your credit report will establish a credit score. Your credit rating is based on:

  • The information on your credit application 
  • Your credit file 
  • History with the lender you are asking for credit 

Data is held securely by credit agencies. It will contain all your history of utility company accounts, credit cards, loans, and any other type of credit. These agencies collect the information and provide it to the lender you are asking for a new loan.

The lender uses all of the data on your credit report to determine whether they are willing to give you a loan. The data helps them to assess the level of risk in loaning money. If your score is low, you may be refused the credit application. You may still be able to get a loan, but it will be at a higher rate of interest to protect the lender.

FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

7 tips to improve your credit score

There are some things you can do to improve your credit rating. You can take action today to help rebuild your credit score. Taking these steps helps to improve your overall score, and so will give you access to better credit deals.

1. Electoral roll register – If you are not on the electoral roll on your current address, then that can affect your credit score: register to vote, either online or by post. Registering to vote is a quick and easy first step to rebuilding your credit.

2. Manage your money properly – If you tend to pay bills late or wait for reminders, you need to stop doing this. Late payments or issues with paying bills is a big red flag to lenders. Make a plan and look at when your bills are due. Have your bills automatically pay by direct debit and make sure you have enough money in the bank to cover them. Consistently paying utility bills, internet, and phone bills prove you can take care of your money. Lenders will see this and be more inclined to offer credit to you.

3. Mistakes on your credit file – You can apply for a copy of your credit file from the agencies that have the information. When you receive your report, check it thoroughly. If there is any activity on there that you don’t recognise, report this immediately. Mistakes on credit files can happen, so check that everything on yours is as it should be.

4. Manage your debt – If you currently have a large amount of debt, you will have to reduce this if possible. A high amount of debt and loan commitments makes lenders less likely to give you more financing. Massive obligations make it more challenging to manage any new ones. Aim to pay off credit cards and other loans as quickly as possible.

5. Check if you are linked to someone else – Holding joint accounts with other people, such as a spouse or family member, can affect your credit. If that person has a bad score, it can change yours too. If possible, clear any joint accounts if you are linked to someone with bad credit.

6. Don’t move too often – If you have moved house regularly, it can affect your credit score. Staying at one address and building a good payment history for a few years will boost your credit. Previous addresses will have to be checked during a loan application, so multiple ones have an adverse effect.

7. Credit utilisation – Your credit utilisation is how much credit you have based on how much you are eligible to borrow. So, your credit score can give you a limit of £5000. If you have £2500 in debt, your credit utilisation is 50%. Using less of your available credit limit is usually seen favourably by banks. Aim to keep your credit commitments to between 25% – 50% of your total credit limit.

Other ways to improve

The above steps will make a significant impact on your credit and give you access to better deals. 

But you can also try other things to improve your credit rating. Having no history is just as harmful as a bad one. So, if you have had very little credit in the past, consider taking out a credit card. Credit cards for people with bad credit or no credit are available.

These credit-builder credit cards usually have a small limit. You can use the card to make purchases and pay off the balance each month. The interest rates on these cards are much higher. Because these cards are mainly for people with bad credit, the interest rate reflects this. So, make sure if you do use one of these, you clear the balance each month.

By managing a card like this and successfully clearing the balance, your overall score increases. Good payment history is an indication that you can achieve financial commitments. Lenders will see this and be willing to extend you the credit you need.

Friends Capital help people with all types of credit score

An independent financial provider will be able to give you impartial advice so you can build a good credit score. At Friend’s Capital, we work with all of the top lenders in the UK. If you have bad credit or want to consolidate your debts, we can help. Our experts will be able to find the right product for you. We work with banks that can give you bad credit loans or a debt consolidation loan. Contact Friends Capital today.

What is mortgage life insurance?

A mortgage will be one of your biggest outgoings each month. But how would your loved ones cope if they had to take over this after your death? 

If you have a mortgage, you should consider a mortgage life insurance policy. It will provide you with peace of mind that your outstanding debts and other responsibilities are taken care of properly. Mortgage life insurance, or mortgage protection, is linked to the debt on your property. If you die before you pay off the mortgage, this type of insurance covers the loan.

Types of mortgage insurance

When it comes to mortgage protection, there are two types to choose from:

  • Decreasing term cover
  • Level term mortgage cover

A decreasing term cover policy is a type of coverage that pays the outstanding balance on a mortgage. As you pay your instalments each month on a repayment mortgage, the principal debt decreases. A decreasing term cover policy runs alongside this. So, should you die before paying off the mortgage, this type of insurance pays off what is left owing to the bank.

Level term cover pays a fixed amount regardless of what is on the mortgage. As the amount of payout stays the same, the monthly instalments tend to be more expensive. You may have to choose this type of insurance if you have an endowment mortgage, for example.

Whichever type of mortgage you have, you need to have an insurance policy that provides enough cover. If you have a £250,000 mortgage over 25 years, your plan should cover this.

Choosing mortgage insurance

When you take out a new mortgage, you may have a policy from the lender. If so, the mortgage is covered in the event of your death. However, you may not be getting the best deal. Taking out the policy from the lender only gives you a choice of their cover.

Taking out a policy at the time of your mortgage gave you what was available then. There may be a better deal out there for you now. When looking to change your mortgage life insurance, you will need to make sure the policy:

  • Provides enough cover for the overall debt
  • Covers any new health conditions you may have

Using a professional company that works with multiple insurance companies will help you compare deals. If you took out your policy a long time ago, things might have changed. If you were a smoker before and now you are not, you could get cheaper insurance. An independent advisor will be able to give impartial advice on the best mortgage life insurance policies.

Do I need mortgage life insurance?

It is not a legal requirement to have mortgage life insurance, but you will want to have this if you have dependents. The main reason people have this type of cover is to protect their spouse and children after their death. How will your household cope if you are not there to contribute to the mortgage payments?

The insurance will cover the balance on the mortgage, so your loved ones don’t have extra stress. It is already a testing time when someone passes away, so this insurance gives people one less concern.

Single or joint life policy?

When you look at insurance to cover a mortgage as a couple, you can choose a single policy for each person or a joint policy. There are pros and cons to both, so you should consider this.

Some of the benefits of a joint policy include:

  • Cheaper than two single plans
  • Less hassle to set up if you have no dependents

While this type of mortgage life insurance can be less expensive than taking out two separate policies, you will only get one payout. The payout on a joint policy usually happens on the death of the first policyholder. If you split from your partner further down the line, you will need to find a new plan.

Benefits of two single policies include:

  • Each policy will pay so there are two payouts instead of one
  • You won’t have to find a new plan if you split up

Taking out two single policies tends to be better for couples with dependents. If you have no children, you only need the insurance plan to pay out once. If you do have children, single policies will payout on the death of each policyholder. It will make sure any remaining dependents do not have the responsibility of the mortgage.

Finding the right policy

Depending on your situation, you will need a specific type of insurance. Whether you have children, the value of the property and other debts will all be considerations when looking at insurance. 

Friends Capital works with the top insurance companies in the UK. By comparing the best mortgage life insurance deals on the market, we can find the right cover for you. Our expert advisors can provide you with impartial advice. You will receive all the information you need about insurance so you can make an informed choice. Contact us today.

Bad credit and bridging loans

Bridging loans are a desirable financial solution under many scenarios. Because of this, even people with bad credit may want to make use of a bridging loan.

Can I get a bridging loan with bad credit?

Yes/possibly – There may be times when you are unable to keep up with your financial responsibilities. You may be unable to make payments on loans and other debts for many reasons. You may have become ill or lost your job; not paying is not always intentional.

Whatever the circumstances, if you have had problems in the past, it can affect your credit history. If you have bad credit or poor credit history, it doesn’t necessarily mean you will be turned down for a bridging loan. It may be more challenging to get approval for some types of credit, but others may be possible.

Check your credit report

Make sure you actually have bad or poor credit – sometimes people miss a payment or two and assume they have poor credit this isn’t always the case. FriendsCapital has partnered up with checkmyfile – the UK’s only multi-agency credit report – check your credit report.

What is a bridging loan?

A bridging loan is, as the name suggests, is a type of finance that bridges the gap. It is typically a finance option when buying a house. If you haven’t sold your home but want to complete on a new one, a bridging loan is an answer.

Read more on Bridging Finance here 

These types of short-term loans can be useful if you want to renovate your house before selling it. You may also want to have a bridging loan in place if you are buying property at auction. It is usually a short-term loan of 12 months or less. A bridging loan is paid off when you sell your house. When you take out this type of loan, it will need security, usually a property.

Applying for a bridging loan with bad credit

Even if you have bad credit, you can still get the loans you need. Many lenders are willing to work with you so you can find the right finance solution. Applying for a bad or poor credit bridging loan will require a specialist lender. An expert advisor will be able to look at suitable loan companies for you.

When applying for the bridging loan, you should:

  • Be honest about any issues with your past credit 
  • Provide all the necessary documentation
  • Have property for security

The financial expert will be able to explain all of the documents you will need to complete an application. Having an honest discussion about your previous credit problems is vital. It allows the advisor to choose the right financial lender. They will know which lenders specialise in providing financial products to people with bad credit.

You will have to think about when and how the loan is going to be repaid. If you are using your current house to satisfy the credit, then selling it at the right price will ensure a quicker sale. The bridging loan is either a closed or open loan. A closed bridging loan has a set completion date. An open-bridge loan won’t have a set date for you to pay it off. How you intend to complete the loan requirements will dictate the type of loan you get.

A bridging loan company may consider other assets if you have them. You may be able to use business equipment or items of high value. The advisor will be able to discuss any options for securing the loan with you.

Why a bridging loan is possible with bad credit

When you take a mortgage or other types of credit, your credit history is a vital source of information. The financial institution uses your credit history as an indication of possible payment issues. A mortgage lender needs to know you will pay for the whole term of the mortgage agreement. A bad credit report may give them cause for concern, and you may not get a mortgage.

A bridging loan focuses on the value of the security you are using. The bridging loan application process involves getting a valuation for the security property. As long as your property is valuable enough to cover the loan you are applying for, a lender may give you a bridging loan.

Because bridging loans are this way, the company tends to look more at the value of the property than the credit history. Some big banks or financial companies may not want to risk this type of loan if you have bad credit. It is essential to find the right company, and a financial expert will be able to do this.

Apply Now

If you think a bridging loan is what you need, we can help. We work with many different lenders and can find the right one for you. Specialist loan companies and banks will offer people with bad credit a loan. If you want to apply for a bad credit bridging loan, talk to Friends Capital today.

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