The tight credit conditions currently in operation mean that there are more and more people who are struggling to get on the property ladder at all, leading to more tenants for landlords. It does go to highlight one other thing, however; the importance of a good credit rating. Mortgage lenders are becoming increasingly more selective about who they offer finance to, so it pays to know what your credit status is.
Your credit rating
Banks and other lenders share information about your credit rating and create a ‘file’ of your payment history. Anything from a mortgage to a mobile phone bill can appear on your credit rating and missed payments will flash up negative, potentially worsening the chance of you being able to borrow in the future. It’s not all bad though, paying back overdrafts and short terms loans can really improve your credit rating.
As a landlord, what’s likely to help you most is an existing and secure mortgage that you can prove is being paid back. Rent Guarantee Insurance is essential for preserving a good credit rating and even if you don’t intend to take out any more mortgages in the future it’s always useful to know the credit is available. If you do end up missing a mortgage payment, be sure to make amends as quickly as possible – often a letter to your bank manager can solve the problem.
Checking your rating
It is possible to see your credit rating although it is sometimes quite expensive. Plenty of credit agencies will let you have a look at your status but unless you’ve been turned down for finance recently it’s not worth worrying too much. The best thing to do is keep accumulating payments over a long period of time and that will give you the best chance of a strong rating for the future.
Banks are becoming very canny with who and who not to lend to so make sure your record is good and follow up all the small missed payments. Even forgetting to pay your credit card might damage your reputation so keep tabs on everything and check up regularly.