Do you know your credit score and how it can affect your mortgage application?

Published: February 2017

It’s really important to know your credit score and what your credit report looks when you’re considering buying a home, even if you’re still in the exciting ‘looking for a home’ stage.

Finding out your credit score might sound boring or daunting but don’t fret, it doesn’t have to be difficult. If your score is low, or lower than you want it to be, you can work on improving it before you look to apply for a mortgage. If it’s already good you may be able to improve it further.

When you apply for a mortgage you’ll need to provide at least 3 months of bank statements, per applicant applying. You’re better off working on improving your credit score in the lead up to this than worrying at the last minute and stressing yourself out.

Ways to improve it

Having no credit history can impact your credit rating – As lenders will have little or no information on your previous financial behaviour to base their lending decision. You could get a credit card with a low limit and make small regular purchases on it, paying it off on time which will show lenders that you can manage credit.

Challenge errors – If there are any mistakes on your lending history then you can contact the lender to get it amended as mistakes on your credit report will not work in your favour and you want it to be 100% accurate.

Close unused accounts and cards – You may still have old bank accounts or credit cards open that you don’t use anymore. These can have an effect on your credit score as it shows up as credit that is available to you to spend if you want to, possibly not the best representation to give a lender when applying for a mortgage. Close these accounts and show lenders just the accounts and cards you do use.

Get on the electoral register – If your name’s not on there you will find it much harder to get credit. You can go onto the About My Vote website, enter your postcode to find for your local council, complete the form and return it to your local electoral registration office.

Pay your bills on time – Having a history of paying your bills and loans on time is the best way to improve your credit rating.

There are online tools available for checking your credit score, some are more in-depth than others, and one of these might be better for you if you’ve never checked your score (or it’s been a long time).

Experian offer a free report when you sign up for a free 30-day trial, you just need to remember to cancel the subscription before the end of the free trial. Experian score with numbers and also give you a result from Very Poor up to Excellent so it’s easy to understand and see where you could make improvements.

Noddle offer a credit score facility that is simpler than Experian, it tells you a score from 1-5 and has a shorter report than Experian, it is free for life though and they send you a monthly report to check.

Your can also visit Your Credit Report.

If you’d like to speak to an Independent Financial Advisor (IFA) about your credit score or report we have a panel of recommend IFA’s across our geography, click here to find one near you.