What is my credit score and how can I improve it?

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A question we often get asked here at My Mortgage Pros is: ‘What is my credit score and how can I improve it?’. The reason we get asked this question a lot is because we deal with a lot of people who have been turned down for a mortgage because they have a bad credit score but don’t know what one is, or how they can improve theirs. So, we’ve written this handy guide to explain what a credit score is and, crucially, if you have a low one, how to improve it.

What is a credit score?

Simply put, your credit score is based on the information held on your credit record, which lenders use to assess whether you might be eligible for a mortgage, credit card, loan or other form of credit. Your credit record details your financial history and includes things such as whether you have taken out credit before, if you have ever missed or defaulted on any payments, been made bankrupt or have had any court orders relating to your finances issued against you. All the key pieces of information contained within your credit report are processed using a mathematical algorithm, to give you an overall credit score of between 300 and 850.

The higher the number, the more creditworthy you are deemed to be, based on the information contained within your credit report.
When it comes to mortgages, lenders will consider your credit score along with the information you provide in your application form to decide whether to grant you a mortgage and if so, how much for.

It’s important to remember that although your credit score is important – not just for mortgages, but for any financial products you take out – it’s not the only thing that lenders or providers will consider. So, just because your credit score is low, it doesn’t automatically mean you won’t be able to get a mortgage.

Similarly, if your credit score is high, that doesn’t necessarily mean you will be guaranteed to be offered the best mortgage rates. But, people with a higher score are often viewed by lenders as being less of a risk than those with a lower score, so as a general rule, the higher your score, the more chance you stand of being successful when you apply for a mortgage or other form of credit.

What is a credit score used for?

Lenders will use your credit score, along with the information contained in your credit report, to assess your application for a mortgage or other credit. It will help the lender to decide whether to lend to you, how much to lend and how much interest to charge, among other things.

It will also help to inform the lender of how sensible you are with your finances. If you have a long record of missed payments, for example, a lender may be more reluctant to give you a mortgage, while if you have accessed credit in the past, but always made your repayments on time and have never accumulated much outstanding debt, then your application will be view more favourably.

How can I check my credit score?

It’s always a good idea to check your credit report regularly. It will give you a good idea of where you stand, but can also help you spot any mistakes or fraudulent activity relating to your record, so you can report it and put things right. Equifax, Experian and TransUnion are the UK’s three main credit rating agencies. If you want to view your credit report, you can request your full file, or just get your score. Obtaining your full credit file is useful as you will be able to see your entire credit history, including any payment gaps or other problems, so that if you have a low credit score, you can take steps to rebuild it, based on the areas of weakness in your record.

For example, if you have a history of late payments, taking out a small loan and making sure you make all the repayments on time will help improve your credit score by showing lenders that you have been keeping up the repayments on your most recent credit product.

How can I improve my credit score?

Knowing how to build or repair your credit score is important if you want to improve your chances of getting approved for a mortgage. Here are a few things you can do to improve your credit score.

  • Get on the Electoral Register
  • Check your credit file
  • Use credit
  • Make your repayments on time
  • Clear your debts
  • Check your financial associations
  • Don’t apply for too much new credit
  • Remove any defaults, CCJs and bankruptcies

For a full breakdown of the reasons behind why the above list will help you improve your credit score, check out our guide on ‘How to improve bad credit’. Checking your credit your score will give you a clearer picture of how the banks, building societies and other financial services providers view you when you want to take out credit. Once you know what your credit score is, you’ll have a better idea of where you stand, what your chances of getting approved are and why your application for credit might be rejected.
It will also give you a good idea of what you need to do to improve your credit score, to give you a
better chance of getting credit at lower rates.

Learn more

For more information about how your credit score can affect your chances of getting a mortgage, and to learn how My Mortgage Pro can connect you with an expert mortgage broker who can help you find one, fill out the form below to request a call and we’ll be in touch.