Things which could negatively affect your credit score
You credit score can be affected by several different factors. For example, if you miss a debt repayment, this will reduce your score, and potentially make it harder for you to get a mortgage.
Your score can also be affected if you’re connected to someone else financially and they have a bad credit score, so always be careful about opening joint bank accounts, or setting up credit arrangements with anyone else unless you’re confident they’ve got a good score.
Having lots of different credit arrangements set up can also negatively affect your score, as lenders might be concerned about you being able to manage so many different debts and taking on more borrowing.
How to improve your credit score
The good news is that if your credit score isn’t looking great, there are plenty of things you can do to improve it and boost your chances of being accepted for a mortgage.
First, make sure you are on the electoral roll, as not being on it can impact your credit score. If you aren’t on it, you can register online at https://www.gov.uk/register-to-vote.
Living at the same address for a few years can also help your credit score, so if you’re hoping to apply for a mortgage soon, it’s a good idea to stay put rather than move around.
You should then look at how many credit accounts you have open, including credit cards and personal loans. If, for example, you have cards which you no longer use, make sure to close these accounts.
Try to pay down any large credit balances you have, and make sure you never miss a payment, as always paying on time can raise your score.
It’s worth noting that not having any history of borrowing can work against your credit score, as there won’t be any evidence for lenders of you having managed debts responsibly.
If you find you’re turned down for a mortgage or credit card because you haven’t previously borrowed, there are special forms of credit card, known as credit builder cards, which can help you build your score. They offer low credit limits and charge high rates of interest, so you’ll need to clear your balance in full each month, but as long as you always pay on time they can be an effective way to build your score.
Check for errors
If you’re confident you’ve always managed your debts responsibly, yet you have a low credit score, don’t automatically assume it’s correct.
Your score could be wrong, perhaps because someone might have fraudulently opened a credit account in your name, or because a lender has said you’ve missed a payment even though you’ve always paid on time, so check your report carefully for any mistakes.
If you do find any errors, contact the relevant lender and the credit reference agencies to make sure your report is corrected.
