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How to improve your credit score before buying a home

Your credit score provides an indication to lenders of your overall creditworthiness. It can impact mortgage applications but it is important to remember that if you a seeking a mortgage with bad credit, specialist lenders will be more concerned with the contents on your report than the actual score. Bad credit lenders will base your offer on how severe your credit is, the size of the debts and how much time has passed since they were registered. 

How do credit scores work?

There are three main credit reference agencies used by lenders in the UK which are: TransUnion, Equifax and Experian. They will use information from public records and your personal banking to paint a picture of how you manage your finances. The agencies then assign you with a number that becomes your credit score. Each credit reference agency has its own scoring system and a ‘good’ number from one may be ‘fair’ on another. The scoring systems are as follows:

  • Equifax – 0-1000
  • Experian – 0-900
  • TransUnion – 0-710

How can I improve my credit?

  • Download your credit reports

You need to download and access your report from all three credit reference agencies to fully understand how lenders will view your application. Checking your score will not leave hard checks on your file so you will not be penalised for viewing it. We recommend you view all three as information may appear differently on each one. For example, one agency may have registered adverse credit later than the others. 

  • Make sure all information is accurate

It is important to check all your information is accurate and up to date on your reports as inaccuracies could be damaging your credit and therefore impacting your mortgage applications. Under each account listed, you should be able to see if they are still active and whether your payments are up to date. If there are any errors you can get in touch with the company that made the error and ask them to file a notice of correction. This can take up to 3 months to be reflected on your credit report but the wait will be worth it in the long run as it could boost your credit score. 

  • Check your financial connections 

A joint account or a joint form of credit could impact your credit score if the other person has an adverse history and vice versa, which is important to consider before signing up to lend with someone else. It is also important to file a notice of dissociation for any outdated links to ex-partners or even ex-housemates you managed household bills with. 

  • Register on the electoral role

Registering to vote will improve your credit score as credit reference agencies use the electoral roll to confirm your identity, address and citizenship. This takes minutes to do and can be done online. Lenders like to see that you are registered as it is viewed as a sign of stability. Registration could provide a welcome boost to bad credit history.

  • Pay bills by direct debt

A missed payment can leave a negative mark on your report and reduce your score. Direct debits can be an easy way to avoid this. The company you need to pay your bills to will arrange this for you by requesting your bank details. The funds will then automatically leave your account on the bill due date.

  • Reduce your lending 

Lenders can view maxed out credit cards or overdrafts as a sign that you are not managing your finances well and that you are relying on credit to live day to day. If you can, try and reduce the amount of credit used as soon as possible as this can have a positive impact on your credit score. This will help with your affordability calculation for your mortgage too as you will have fewer monthly commitments which will allow for a bigger loan. 

  • Close any unused forms of credit

Open active accounts all contribute towards your credit score and mortgage application whether they are used or not. This is because the lender can see you have access to lending easily which can make you a bigger risk. Think about closing down any old accounts or taking advantage of consolidating credit cards onto one interest-free balance transfer card. 

  • Reduce the amount of credit applications before getting a mortgage 

Every time you apply for credit such as a credit card, phone contract or even opt to pay your car insurance in monthly instalments the company will leave a hard search on your credit report before making a decision. A lot of searches in a short amount of time can make you seem desperate for credit to lenders and therefore make you a bigger risk for more, especially large mortgage loans. We recommend keeping credit applications to a minimum in the 6 months before you apply for a mortgage to be safe.

  • Be patient

As stated previously, there is no quick fix to improving your credit score, especially if you have bad credit. So, patience really is key to building up a good credit history. In the meantime, saving a larger deposit and revaluating your outgoings will help your mortgage application. 

  • Use a bad credit mortgage broker 

If you are looking to buy a home and think your bad credit is impacting your chances, speak to one of our specialist brokers. They have plenty of experience in helping people with bad credit find a mortgage and can offer guidance on how to improve your score before buying a home too. Follow the links below to get in touch and we will assign you one of our bad credit superheroes. They will search the whole of the market to find a mortgage tailored to you.


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