How to Improve Your Credit Score for a Mortgage

Getting a mortgage can seem daunting, but it doesn’t have to be difficult – especially if you know how to improve your credit score in advance.

Your credit score not only affects your chance of being accepted for a mortgage, but may also affect the size of your monthly repayments.

Luckily, there are steps you can take to get ahead.

In this blog we’ll explain how to improve your credit score in preparation for a mortgage application.

How do credit scores work?

Your credit score is based on information held in your credit file, or credit report. When you apply for a mortgage, the mortgage lender will look at your credit file via a credit referencing agency.

The credit referencing agency will compile your credit file using data from a number of sources:

  • Electoral roll information
  • Addresses you’re linked to
  • Previous searches on your credit file
  • Account data from banks, building societies, credit card companies, utility companies and mobile phone contracts
  • Court records

How to improve your credit score: Our top tips

The important thing to remember about your credit score is that it’s not universal. Different lenders will interpret the information in your credit file in different ways, and will assess you using different criteria. The same lender may even assess you differently for different products.

This means that getting rejected by one lender doesn’t rule you out from being accepted by another. It also means that knowing how to improve your credit score is not an exact science – but the tips below should increase your chances of being accepted for a mortgage.

Check your credit file

The first thing to do is see your credit file for yourself. You can normally request your credit files from credit referencing agencies for free. Remember, different mortgage lenders use different agencies, so may have to check multiple files at multiple agencies.

Make sure all your information is correct and up-to-date. Your credit files contain a huge amount of data, and any inaccuracies have the potential to prove a hindrance on your mortgage application.

If you find any incorrect information, contact the credit referencing agency and ask them to correct it.

Register to vote

If you’re not on the electoral roll, get on it! Registering to vote is a quick and easy step that makes it much easier to get accepted for credit. You can register online in about five minutes.

Being on the electoral roll doesn’t always directly improve your credit score, but not being on it will hurt your chances of getting accepted for a mortgage, as lenders use it to check your identity and address.

Prove you can be responsible with debt

When lenders assess your credit file, what they’re doing is trying to predict your future behaviour. So if you’ve never had a credit card or borrowed money, there won’t be much to go on – meaning your score is likely to be low.

Prove you can manage debt by applying for a credit card, spending a little bit on it and paying off the balance in full every month.

Of course, having a low credit score makes it more difficult to get accepted for a credit card – but there are cards available specifically for people with poor credit history. These credit cards usually have enormous interest rates, so make sure you do pay off in full each month to avoid paying more than you have to.

It will take a little while, but over time you’ll see your credit score improve.

Cut down your use of credit

If you have lots of different overdrafts or credit cards, lenders may see it as a sign that you don’t manage your money well – even if you’re not using them.

Try to lower both the amount of debt and the amount of available credit you have. Close any unused credit or store cards, and use savings to pay off any debts. This should make you a more appealing mortgage applicant.

Take your time

A good credit score doesn’t come overnight, so start planning well before you apply for your mortgage – and be patient!

For more information don’t hesitate to get in touch!

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Keatons blogs are written by a selection of our experienced industry experts.