How to Improve your Credit Score

The general rule is that the higher your credit score, the higher the chance you have that your mortgage application will be accepted. But how do you improve your credit score?

It’s worth noting that no one is guaranteed to be accepted for a mortgage. This is because each lender has developed their own scoring, which means each provider is looking for different things. However, this can also be a positive. If you fail with one lender, there are other mortgage lenders who may be more forgiving.

If you decide to instruct a Mortgage Advisor, it is their job to match you to the right lender. Hopefully, they will succeed at this first time, but it’s not an exact science. Always keep in mind that both you and your Mortgage Advisor want the same thing which is for you to end up with the best deal available to you.

There are several different credit reference agencies in the UK, including Experian and Equifax. It is a good idea to check as many of these agencies as possible to get a rounded picture of your credit score. Also, it is possible that one of these agencies might have incorrect information about you. Checking with several agencies will help you identify any such discrepancies.

In order to help you improve your credit score, we’ve listed some best practice tips below.

Ways To Improve Your Credit Score

Avoid Unnecessary Credit Searches

Carrying out multiple credit searches can negatively affect your score. This is because it signals to lenders that you’re exploring the option of borrowing more which is something they don’t like to see.

Be careful when using price comparison websites, because they are well known for credit searching on individuals. If you know you want to apply for a mortgage soon, it is wise to avoid applying for any other credit in the lead-up.

Check You Are on the Voter’s Roll

Being on the electoral roll adds a lot of points onto your score. It indicates stability and lenders are big fans of that. However, you need to ensure that your name is spelt correctly and that it’s your current address you are registered at, not an old one. These are common mistakes people make and they can be detrimental. If you’re not already registered, it’s easy to do so online.

Don’t Run Close to Your Maximum Limit

Using a credit card and paying off the balance in full each month is good practice because it indicates that you are good at managing your finances. However, if you are maxing out your limit or, worse still, exceeding your limit or overdraft, that does not look good to lenders.

Check Your Address History Is Keyed Correctly

Quite often, people forget to tell their credit provider that they have moved address. When this happens, it can appear to lenders that you are living in two places at the same time.

It’s also worth checking that all addresses are spelt correctly. If you have lived in a flat this can be tricky as the flat/apartment number can be formatted in different ways.

Close Any Unused Credit Accounts

If you have cards you don’t use, contact the providers and get the account closed. In the short term, this can have a negative effect on your score as the credit reference can’t tell if it’s you that is closing the account or the provider. But don’t worry, in the long run, it will be much better for you.

It is also good practice from the point of view of security. This is because it reduces your chance of falling victim to fraud as you might not notice you have lost a card if you don’t use it regularly.

Remove Financial Links to others:

If you have a family member or ex-partner connected to you then their actions could be affecting your score.

However, you won’t be able to get the financial association removed if the account is still live. To remove one of these links you should contact the credit reference agencies and make a request.

Credit Scores

Some consumers feel credit scoring is an unfair way for lenders to assess applications. However, lenders feel differently. This is because it is much cheaper for them and computers give more consistent outcomes.

If you’re looking to increase your chances of having a mortgage application being accepted the first time, then send an up to date copy of your credit report to your Mortgage Advisor in advance. The more your Advisor knows about your finances the better. Also, there are still some smaller lenders out there that do not use credit scores. These lenders do it the ‘old-fashioned’, manual way. However, they will still have certain rules about the number of defaults and CCJ’s they will allow.

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