How to Boost your Credit Rating Before Applying for a Home Renovation Loan

Home improvements

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Ideally, home improvements can be planned meticulously. Hopefully, you will be able to decide exactly when you want an extension, a conservatory or a loft conversion and make financial plans accordingly. However, it may just be the case that structural work is necessary and a significant outlay cannot be avoided.

Whether your home improvements are forced upon you or not, you can usually turn to a lender for help. Doing so though also requires careful planning. Find out here how you can boost your credit rating in anticipation.

Tips to Boost your Credit Rating 

Home Improvement Loan

Most banks and building societies will offer a specific loan tailored for this purpose – Either a home improvement loan or what’s called an equity release loan.  Either way, the loan is likely to entail 5-10 years of repayment and is secured against the equity in your home. Sounds simple enough. However, although such a loan is not anywhere near as complex as a mortgage, you still need to take some sensible steps to give yourself the best possible chance of securing a lender’s agreement.

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Work Out Costings

The first of these is a realistic estimate of the loan that you need. This will, of course, be largely based on the cost of the work you need doing. Because you need an accurate estimate, you should get several quotes for the work. It is also a good idea to add on 10% to your evaluation, just in case you find that the contractors you use come up with a surprise or two. Before deciding on the loan you will request, decide if you can pay any of the amounts in cash. If so, it will reduce your repayments.

Check your Credit Report

The next step is to check your credit report. This document contains your credit history and a record of every loan you have received and hopefully paid back. It is one of the first things any lender will check before evaluating your financial reliability as a borrower.

As a result, it is important to check the report yourself, to make sure that there are no discrepancies which could count against you. Learning about credit ratings is simple and if you are looking to ensure the best possible credit rating and report, just make sure that you pay back loans and bills on time.

Even a late utility bill can count against you. Another simple step to take is to make sure you’re on the electoral register. It’s another sign of stability and reliability in the eyes of a potential lender.

Get All your Documents in One Place

Once your credit report is in order, make sure that you have other relevant documents on hand such as salary slips and tax records. You are now in a position to apply for a home improvement loan. It is advisable to check different lenders while making sure all along that you check the fine print and are aware of any extra charges you might incur.

Before you actually apply for a loan, it is also important to have detailed plans for your home improvement project to hand. If you want to instil confidence in a lender, it is vital that they see you are on top of the plans and fully understand them.

boost your credit rating

However, it is worth noting one potential negative aspect of a home improvement or equity release loan. If you are looking to sell your property in the coming few years, a current and outstanding loan could complicate things. Other than that though, follow these simple steps and you should soon be developing the home you dreamed of.

Gina Caro

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