‘Help to Buy’ hopefuls advised to check their credit report

Are you one of the 40 per cent of would-be homeowners under 40 who plan on applying for the government’s controversial Help to Buy scheme in 2014? If so, you may need to check your credit report.

According to Experian’s latest study, average deposit saved by the Help to Buy hopefuls is around £9,590, with 2,000 applicants in November alone; that figure rising to 6,000 in January.

Research shows that the average deposit saved by the Help to Buy hopefuls is around £9,590, with 2,000 applicants in November alone; that figure rising to 6,000 in January.

The new government scheme allows potential homeowners to purchase homes up to the value of £600,000 with as little as a 5 per cent deposit, with a government guarantee of up to a further 20 per cent towards their mortgage.

But those wishing to apply for credit or mortgages under the Help to Buy scheme could benefit from obtaining a credit report through one of Experian’s CreditExpert reports

By registering for Experian’s 30 day trial, you’ll have unlimited access to your Experian CreditExpert report and credit rating, allowing you to get a good idea of whether or not you will be accepted for credit in future.

Prime Minister David Cameron stated that he hoped this year would see “thousands more realise their dream of home ownership”, although it has been hinted that this significant increase of homebuyers could spark an unsustainable boom in the housing market.

The report also came with a warning; 26 per cent of applicants had not saved the minimum deposit of £5,000 that they needed in order to take part in the initiative, and bad credit ratings could also affect their chances of getting a mortgage.

Bad credit ratings

The study revealed an average of outstanding credit owed for applicants is about £4,600, increasing to £5,240 for those over 40. Those owing the highest credit tended to be located in the East Midlands, with that figure significantly lower in the South East at £3,940. Around five per cent owed creditors over £15,000.

Lenders increasingly rely on database and credit score checks to assess credit risks, and many are unaware of their own credit rating or the elements that could have a negative impact on their score.

According to Experian’s report, 40 per cent of applicants are not listed under the electoral roll at their current address, which could affect their credit scores.

From the report: “Those living in the East Midlands, Yorkshire and London proved the least likely to have their names on the electoral roll. Ensure everything is accurate and up-to-date. Simple issues like incorrect address details, linked accounts they may have forgotten about and not being on the electoral roll can hamper attempts to access a mortgage.

“Buyers should also play close attention to things like outstanding accounts that should be marked as settled.”

Experian credit checks

It is a good idea to monitor your credit report, as it is updated regularly, and knowing your score could save you from any unhappy surprises, along with alerting you to any errors or fraudulent activity on your account which could also have a negative impact on your overall credit rating.