Get ten out of ten.
Why credit score and financial health checks are important before applying for a mortgage
Improving your credit rating is one of the most effective things you can do prior to purchasing or remortgaging. This takes time, so you need to be prepared to chip away at it gradually.
Credit scores and credit reports
There are three main credit referencing agencies in the UK and they all use your personal banking information to paint a picture of how well you manage credit. This is summarised in a number – your credit score. Your credit score is vital; it determines whether or not you can take out a mobile phone contract, it influences the amount of interest you pay on your credit card, and it can make or break your property purchase.
When you apply for a mortgage, the lender will ask one or more of the credit referencing agencies to look into your financial history to help them make a decision. Having a good credit score increases your chances of a successful mortgage application, but a bad credit score can mean a rejected application or a higher mortgage rate.
Ten tips for improving your credit rating
1. See your credit report
The best way to understand your credit report is to see it for yourself. You can request your report from the three credit referencing agencies (Experian, Equifax, and TransUnion). Your credit checks aren’t recorded and only you and the credit reference agency will know about them – checking will not have an adverse effect on your score. So, check regularly, especially before you make any significant applications for credit.
The checks are all done online and are quick and simple to do. They are also free.
Knowing what your rating is with each agency will give you a great benchmark for improvement.
2. Make sure of the information contained in your report
The most important thing to check on your credit report is that all the information is correct and up-to-date. Make sure all your accounts and credit cards are listed and take a look at whether you have any defaulted payments or other factors recorded. If any of these details are wrong, you need to contact the credit referencing agency to correct them.
It may take a bit of back-and-forth with the agency to add missing accounts or resolve any historic defaulted payments, but it is vitally important. Something as small as an unpaid phone bill from six years ago could have a serious impact on the mortgage rates available to you, so go through it in as much detail as you can.
3. Check any financial links to other people
Many people don’t know that opening a joint account with another person means that their credit score can have an influence on yours. Make sure you aren’t financially connected to anyone you shouldn’t be and ask for any outdated links to be broken.
Obvious financial links would be an ex-partner but many renters open shared accounts to manage household bills and this also creates a link.
4. Register on the electoral roll
If you’re not already on the electoral roll, the simple act of registering to vote will improve your credit score. It takes a few minutes and you can do it online. Credit reference agency Experian recently stated that if you are registered to vote, lenders are likely to see that as a positive sign when you apply for credit because they can more easily confirm your identity. It is seen as a sign of stability.
Experian have revealed that appearing on the electoral roll at your current address can add 50 points to your credit score. However, not everyone is aware that being registered on the electoral roll will have any impact on their credit rating. For some, this could mean the difference between a good and an excellent score. This, in turn, could unlock better rates on loans, credit cards, and mortgages.
5. Pay bills by direct debit
Missing a payment will leave a negative mark in your credit report and it can push your credit score down. An easy way to avoid this is to make sure all your bills are paid by direct debit.
If you think you might not be able to make a payment, talk to your creditor before defaulting, as they may be able to arrange a repayment plan that helps you avoid a big black mark.
6. Prove you can manage debt
If you’ve never borrowed money, you may have a very low credit score because you haven’t proved that you can responsibly manage debt. If this is the case, you should apply for a credit card and make sure you repay the balance in full every month.
It will take a few months, but you will see a gradual improvement in your credit rating. One obvious sign of a growing credit score is your bank offering to extend your credit limit.
You must be very careful with your first credit card. Some credit cards charge a cripplingly high rate of interest, but if you repay the card in full each month then you won’t have to pay interest at all. And remember – never borrow more than you can afford to repay in full, as building up debt on a credit card will damage your credit score.
7. Reduce your use of credit
If you use a lot of unsecured credit, in the form of credit cards or overdrafts, it can be considered as a sign that you don’t manage your money well or that you’re living beyond your means. This will make you a much less appealing mortgage applicant.
Try to lower your use of unsecured credit to below 50% of the amount available as soon as possible, as this can have a positive impact on your credit score. It’s important to reduce this debt as much as possible before applying for a mortgage.
8. Credit facilities to avoid
At all costs avoid payday loans and credit card cash advances. The use of gambling sites is also strongly discouraged.
Excessive use of overdraft facilities can cause a lender concern regarding the amount you can afford to borrow and repay.
9. Close any unused accounts
Closing any unused bank accounts can help improve your credit score. If you have multiple credit cards, you should look at consolidating the debt into just one. Take a look at interest-free balance transfer credit cards, that allow you to move debt from cards that charge interest onto ones that don’t – but beware costly transfer fees.
10. Be careful about applying for credit and the number of credit searches carried out
Every time you apply for credit – whether it’s for a credit card, a mobile phone contract, monthly car insurance payments, etc – the company will look at your credit report before making a decision. They will do what’s known as a hard search, which means the search is recorded on your file.
Too many of these searches in a short period of time makes you look desperate for credit and can lower your credit score. If possible, it’s best to try to avoid making any applications for credit as much as six months before you think you’ll be applying for a mortgage.
11. Be patient and have regular reviews with your personal banker and work closely with your trusted mortgage broker
It takes time to build a good credit history, save a sufficiently large deposit, and earn enough to take on the repayments and running costs that come with owning your own home. But it is certainly worth knowing your credit status because it will pay off in the long run.
At Landmark Private Finance we can help you find the best mortgage with your newly improved credit score

Please feel free to contact us on 020 3773 7299 if you have any queries or concerns regarding your credit score. We look forward to assisting you.