credit score

By Mark Dickety on

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Getting to know your credit score

Imagine being in a situation where someone asks you for a substantial sum of money. You’d naturally want the reassurance that they can repay it, right? This is the perspective that lenders take when deciding whether to approve your mortgage application.

Your credit score serves as a pivotal factor in how lenders assess your “creditworthiness.” Although lenders consider your credit history, it’s still possible to get a mortgage even with a less-than-stellar credit score. We’ll explore various strategies for improving your credit and delve into what it means to have a strong credit score.

What’s a credit score?

A credit score, also referred to as a credit rating, is a three-digit numerical representation of your reliability to borrow and repay funds issued to you by lenders. The higher your score, the better your creditworthiness. Essentially, a higher credit score enhances your likelihood of approval for various forms of credit, including mortgages, loans, and credit cards.

Factors impacting your credit score

In layman’s terms, your credit score is shaped by your past financial conduct.

Your score is formulated using information from your credit report, which includes

  • details on how you manage your bank accounts,
  • data from the electoral register,
  • records of bankruptcies,
  • history of any credit-related activities you’ve engaged in over the past six years (such as mortgages, loans, or overdrafts),
  • whether you have joint accounts with someone with a bad credit record,
  • your history of missing payments, late payments or going over your credit limit,
  • defaults on credit agreements,
  • how often you withdraw cash from your credit card,
  • moving house too often or living at an address where a previous occupier had debt and didn’t update their address,
  • making a lot of credit applications in a short space of time.

How does your credit score influence your mortgage application?

The ideal credit score for a mortgage application can vary from one lender to another. A low credit score doesn’t always imply poor credit repayment – sometimes, it’s due to a lack of credit history. For example, if you’ve never borrowed or paid off an overdraft, your score may appear low because there’s no track record of you reliably repaying money.

If you suspect your credit isn’t strong enough to secure the right mortgage deal for your situation, we strongly recommend taking steps to build your credit promptly. Doing so will increase your chances of finding a mortgage tailored to your needs.

Securing a mortgage with a less-than-perfect credit score

Getting a mortgage with a poor credit score is certainly feasible, provided you can demonstrate responsible financial management to potential lenders. It’s worth noting that your application might take longer to process compared to someone with a higher credit score, as more investigation will be required.

To enhance your chances of mortgage approval with a low credit score, consider the following steps before applying:

  • Clear outstanding debt
  • Ensure all bills, including rent, phone, and utilities, are paid on time
  • Close any unused credit lines and bank accounts
  • Register on the electoral roll
  • Check your credit report for discrepancies/errors
  • Avoid spending more than 30% of your credit card limit

Strategies to enhance your credit

If you’re dealing with a low credit score or have no credit history, it’s advisable to work on building your credit profile before applying for a mortgage. Here are several ways you can help to boost your credit score:

  • Avoid using payday loans and ‘pay-in-three’ services, as they can adversely affect your credit rating
  • Think about joint accounts if you cohabit with a partner. If they have bad credit, your score will be impacted
  • Use services where you can link your bank account to your credit report
  • Have a plan in place to steadily pay back debt

How an adviser can help

Regardless of whether or not you have a good credit score, there are a number of routes you can take to get onto the property ladder.

If you’re concerned about your credit score impacting your chances of being approved for a mortgage, we recommend consulting with an adviser. While they cannot provide financial advice, they can shop around to help you find a mortgage suited to your needs.

Get in touch today to explore your options.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
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