How to improve your credit score?
30th June 2022
What is a credit score?
A credit score is a formulated number that shows how reliable you are with repaying money. The higher this number, the better your score.
With mortgages a lender will take into account your credit score when it comes to offering an applicant a mortgage, most lenders will look to lend to people who have a higher credit score as it shows that they are more reliable when it comes to repayments.
Having a good credit score can boost your mortgage chances. It can increase your possibility of being accepted by a lender, a good score could mean you have access to better rates and even higher borrowing.
Despite this, mortgages for people with poor credit history is still possible. With a whole of market mortgage brokers, you will have the ability to shop the entire mortgage market and have access to exclusive deals from specialist lenders.
How to improve your credit score?
Although you will still be able to secure a mortgage with a low credit score, you may choose to improve your chances before you apply and here’s how:
Check for errors
It’s worth checking your credit report regularly to make sure that the information it contains is correct and up to date.
Even small mistakes, such as a mistyped address, can affect your score which could be enough for a lender to refuse you credit or drop your rate.
If you notice any mistakes, it's important to get them rectified as soon as possible.
End financial association with others
Living with or being married to someone who has a bad credit rating won't affect your credit score, but taking out a joint financial product with them will mean that potential lenders will need to look at the credit score of all applicants.
This is because lenders will always want to protect their interest, the best way they can do this is by looking at credit reports for all applicants when assessing an application, even though there may be 4 people on the mortgage, just 1 person's circumstances could affect the ability of all applicants to make repayments.
Build your credit history
Having little to no credit history can often be just as bad as having poor credit history, it makes it difficult for companies to judge your ability to make repayments, and often your choices may be limited to lower credit lenders or even no lenders at all.
Prove where you live
If you're not on the electoral roll, you could find it very difficult to get credit.
The electoral roll is used to confirm that you live at the address given in your application - a key part of the identity checks that lenders carry out.
Experian has revealed that registering to vote can boost your score by as much as 50 points.
Credit building cards
If you want to improve your credit score, you might want to think about getting a credit-builder credit card. These are cards designed for people who have little to no previous use of credit or people who have a bad credit history, these cards can help show that you are able to repay credit on time which will start to increase your credit score.
Instant score boosts
If you have got an Experian account, you can show them that you are managing your money through examples such as paying your Netflix, Spotify and Council Tax on time, and even paying into savings or investment accounts. However, It is worth checking with the credit reference agency that you use to see if this service is offered.
Avoid multiple applications
If you have been declined for credit, avoid applying for further credit or borrowing immediately.
Multiple applications in a short period of time can have a negative affect on your credit score, not only are you going to have multiple credit searches which can bring down your score, but future credit providers can see that multiple companies have been searching your credit report, which can give the impression of being refused credit so you are just trying everyone until someone says yes.