Improve your credit score before applying for a mortgage

Your credit score is used by mortgage lenders to decide whether to lend you the money to buy or remortgage your property. But if you think your score seems a bit low, there are steps you could take to improve it.

We’ve already looked at why credit scores matter and how you can still secure a mortgage even if you have a bad score.

Here, we’ll give you some tips on how you can improve your credit score.

Each lender has different criteria when it comes to credit scores. No matter what your credit history looks like, checking your score before you apply for a mortgage will really help. As well as giving you a chance to put the record straight, you’ll have an idea of what your credit history looks like to lenders.

There are three main credit agencies that lenders use, including Experian and Equifax.

But if you want to check your credit score, you can apply to a credit reporting company, such as Check My File, which offers a FREE 30-day trial. After the trial ends, the subscription is £14.99 but it can be cancelled at any time.

How to improve your credit score before applying for a mortgage

Address the situation

This sounds like a very obvious one, but are you on the electoral roll? If you’re at home with parents or in shared accommodation, check that you are on the roll. Being on the electoral roll proves you have an address. If you can’t prove that, it could delay your application. So, check before you start to apply for a mortgage.

Build a credit history

If you’ve never had a credit card or a loan, it’s difficult for lenders to observe how you deal with debt. We’re not saying you should splash the cash on an unnecessary purchase! But having a credit card and paying it off in full is better than having no credit card. That’s because without credit history, a lender will struggle to see how you deal with debt. Make sure you get a card in plenty of time before applying for a mortgage. If you do it too close to your application it could cause your credit score to dip. But getting one a few months before will help demonstrate that you are able to manage your debt.

Don’t max out your credit

No matter what your maximum borrowing limit is on your credit card or loan, don’t use it all. If you have a limit of £4,000 and have borrowed £3,990, then lenders won’t look at it in the most positive way. It can it appear that you’re not a responsible borrower. If you keep your borrowing to no more than 30% of your limit, it helps your credit score.

Repay your debts and be timely

If you have debts, make sure you’re paying regularly and more than the minimum amount. Making repayments on time and, where possible, in full shows lenders you’re reliable. Forgetting to make a payment or paying the minimum amount leaves home loan lenders with questions about whether you’ll get behind with mortgage payments.

Check for errors on your credit report

Small errors can be a big deal when it comes to your credit report. An address that has been mistyped means the data doesn’t match up. Without checking it first, a mortgage lender will presume that it’s someone else and that can impact your chances. Did you previously have a joint account or joint mortgage? If so, make sure that those details are no longer on your report. In theory, this won’t affect your chances of being made an offer. But if the other person on the account has had issues since your situation ended, it could go against you.

Check for fraud

More than £570 million was stolen by fraudsters in the first six months of the year, official figures show. Sadly, it can be easy to be duped as scammers get more sophisticated. Some fraudsters have been known to secretly use people’s details to get credit. But you won’t necessarily know anything about it until you check your credit history. It’s worth visiting Check My File to see if you can spot signs of fraud.

Do you pay rent?

If you pay rent, then your monthly payments might not be showing on your credit report. Make sure you ask your landlord to report rental payments. They can do that through Experian’s Rental Exchange. Or you can do that through Canopy, CreditLadder or Emma. It all proves that you are reliable when it comes to paying rent, which shows you’ll be able to pay your mortgage.

Looking for a mortgage?

If you want help securing your mortgage or a remortgage and need advice, get in touch with our friendly team today.

Remember, you’re home is at risk if you fail to keep up repayments on your mortgage