4 min read
If you’re planning to apply for a mortgage in the next year or two, improving your credit score can increase your chances of approval and help you access better rates. This guide from My Home Move Conveyancing explains where to start and how to strengthen your score before you apply.
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You can check your credit score for free with all three UK credit reference agencies
Small changes like registering on the electoral roll and paying bills on time can improve your score within months
There’s no single “perfect” credit score for a mortgage, but higher scores unlock better rates and more lender choice
In this article:
When you apply for a mortgage, lenders use your credit score to assess your financial position and decide whether to approve your application, as well as the interest rate and terms they’re willing to offer. Put simply, your credit score helps lenders judge how reliable you are as a borrower and how likely you are to keep up with repayments.
Because a mortgage is a long-term and significant financial commitment, lenders take extra care to lend responsibly. A strong credit score can improve your chances of approval and unlock more competitive mortgage deals, while a weaker score may limit your options or result in higher costs.
If you’re planning to apply for a mortgage in the next year or two, it’s a good idea to check your credit report in advance to make sure your details are accurate. You can do this for free online in just a few minutes. If your score needs improvement, the steps below explain how you can start strengthening it before you apply.
A credit score is a three-digit number that rates your credit history and borrowing behaviour, using all the data available to CRAs.
They take all of the data they have on you and use it to score you. This is then viewed by lenders to determine how much of a risk you are – everything from credit card companies and landlords to mobile phone providers will factor your credit score into what they’re able to offer you.
In the UK, the three main credit reference agencies (CRAs) are:
Experian
Equifax
TransUnion
These organisations compile information about you such as, your personal details, information about your residence and your finances, particularly in regard to any credit you have. That ‘credit’ could come in many forms – personal loans, mobile phone contracts, overdrafts, utility bills, car finance and more.
A good credit score can be the key to unlocking favourable loan terms and interest rates. However, what qualifies as a 'good' score can vary depending on the credit reporting agency assessing your history. These agencies each have their own scoring models, which can create some differences in what is considered a healthy credit score.
Let's break down the general range for a good credit score as assessed by the three major credit reference agencies (correct as of December 2024):
Experian: Typically, a credit score between 881 and 960 is deemed good.
TransUnion: For this agency, a good credit score usually falls between 721 and 780.
Equifax: A score ranging from 531 to 810 is considered good.
If you're aiming for more premium credit products, including the best mortgage rates, you might want to elevate your score into the excellent range:
Experian: Scores from 961 to 999 are classified as excellent.
TransUnion: An excellent score spans from 628 to 710.
Equifax: To be rated excellent with Equifax, aim for a score between 811 and 1000.
Maintaining or improving your credit score involves regular monitoring and responsible financial habits. This can lead to better borrowing options and financial benefits in the long run. Remember, the specific score ranges might change slightly over time, so it’s wise to check for the latest standards from each agency.
There’s no single credit score you must have to get a mortgage, as each lender uses its own criteria and scoring model. That said, your credit score plays a major role in whether you’re approved and the type of mortgage you’re offered.
In general, a higher credit score gives you access to more lenders, better interest rates, and more flexible terms. If your score is lower, you may still be able to get a mortgage, but your options are likely to be more limited and the deals available may come with higher rates or stricter conditions.
Lenders have become more selective in recent years, so if you know your credit score isn’t in a strong position, it’s often worth taking time to improve it before applying. Even small improvements can make a meaningful difference to the mortgages available to you.
Having a low credit score isn’t the same as having no credit history, but both can make getting a mortgage more challenging. Lenders are cautious when there’s limited information to assess how reliably you manage credit, which can work against applicants with little or no borrowing history.
If your credit score is low, some lenders offer specialist mortgage products designed for people with past credit issues. These mortgages can be harder to secure and usually come with higher interest rates, but they may be an option if you’re unable to improve your score in the short term.
If you have little or no credit history, building a credit profile over several months or years before applying can significantly improve your chances. By using credit responsibly and keeping your finances well managed, it’s often possible to move your score into a healthier range and access better mortgage options.
Flexible criteria lenders: These lenders consider a broader range of financial factors. They might accept applicants with past financial difficulties, such as small County Court Judgements (CCJs) older than six months or satisfactorily settled Individual Voluntary Arrangements (IVAs).
Specialist mortgage brokers: Engaging with a specialist broker can be invaluable. These professionals have access to a variety of niche products designed for people facing challenges with their credit histories. They guide you through the process, offering strategies to enhance your approval odds and aligning you with suitable mortgage options.
Highlight other financial strengths: Showcase consistent income, steady employment history, or substantial savings to bolster your application.
Seek professional advice: A knowledgeable mortgage advisor can help pinpoint lenders whose criteria deviate from the conventional credit score-based assessments.
If you exploring these routes, it's possible to find a mortgage provider that aligns with your unique financial situation, even if your credit score isn’t at its best.
Building a strong credit score doesn't come with a fixed timeline. Generally, lenders, especially mortgage providers, review your credit history over the last six years to assess your reliability.
Stability and usage: A few years of responsible credit use can make a significant impact. A young adult demonstrating stable income and wise credit card use could boast a higher score than someone older with extensive debts.
Quality over quantity: It's not merely about having credit; it's about having the right kind of credit. Consistent, positive credit behaviour is very important.
Negative marks: Negative entries like bankruptcies, County Court Judgments (CCJs), or Individual Voluntary Arrangements (IVAs) can linger on your credit report for up to six years. Ensuring these are resolved and eventually removed can be essential to securing a mortgage.
Building your credit history: To work towards a strong credit score, focus on maintaining a good repayment history and managing your credit responsibly, no matter how long your credit history may be.
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Whether you’ve got bad credit, little history, or want to build on an already-good rating, all of these steps can help increase your credit score.
Make sure you’re on the open register: The electoral roll is used by agencies as proof of your residence. By appearing on the open register, you make yourself publicly traceable at your address, which lenders will find reassuring.
Pay your bills on time: Direct debits that constantly bounce will paint a bad picture of your finances, and suggest you’re unpredictable or unreliable. When all your bills get paid on time, you start building a picture of yourself as a reliable borrower.
Consolidate your records and accounts: The clearer a picture the CRAs can get of you, the better your score is likely to be. Having things like your banking, mobile phone contracts and drivers licence registered at different addresses can cause confusion and makes you look suspicious in the eyes of lenders. Even if you move around a lot, it’s important to keep all your records up to date.
Increase your overdraft: An overdraft is counted as credit by the CRAs. Even if you don’t use it, having it available to you helps show you’re sensible with you’re spending and don’t splurge just because you can.
Take out a credit card (and keep up with the repayments): To see that you’re responsible with credit, you need to have the opportunity to use it in the first place. By having a credit card which you use carefully and responsibly, you start building a picture of who you are, and you spend.
Reduce your debts: While having some credit on record is a good idea and will help build out your history, you should keep any debts under control, and paying these off will help prove you’re responsible when lent to. This is particularly important for any debts you have that are overdue.
Limit the number of credit applications you make. Try not to apply for new credit cards or loans at least 12 months before your mortgage application. Applying for credit all the time can be seen as something of a red flag, especially if you’re often turned down. By being careful and selective with your applications, you’ll come across as someone who doesn’t ‘rely’ on credit day-to-day, but uses it occasionally for sensible purchases or borrowing.
Keep credit utilisation low. Aim to keep your credit utilisation below 25%. This demonstrates to lenders that you’re using your available credit responsibly without maxing out your limits, a key factor in credit scoring models.
Timely payments are key. Continue making all credit payments on time. If you encounter any difficulties, reach out to your lender immediately to explore other options. This proactive approach helps prevent negative marks on your credit history.
Engage a mortgage broker. Once your credit score is optimised, consult a mortgage broker. They have access to a variety of mortgage deals and can help secure the best interest rates available to you.
Check your file is accurate. A lot of the information the CRAs hold on you is compiled automatically. It’s easy for them to confuse details and records, and something as simple as an incorrect house number could be harming your rating. Request a report from all three agencies and if there’s any incorrect details, demand to have them amended.
Note: The total amount of debt you have may not be factored into your credit score, but it will be looked at by lenders to see whether it’s feasible for you to build their payments into your budget. If you already have too much other debt to be focusing on, they may see you as too much of a risk.
Once you are happy that your credit score is healthy it is time to apply for a mortgage. Below are the next steps you should take if you are ready to get a mortgage.
How much you can borrow depends on the amount of deposit you’re able to provide; as well as the repayments you can afford. Click here for more information on all the costs associated with buying a house.
The two main types of mortgages are fixed rate mortgages and variable mortgages. Fixed rate mortgages set your rate for a specific number of years whereas the rate for variable mortgages can go up or down, depending on economic conditions.
A mortgage agreement in principle is an indication of how much you’ll be able to borrow. It’s usually arranged during the house viewing process and makes you a more attractive proposition to a seller, as it shows that you’ll be able to afford their property.
For a step-by-step guide to navigating your mortgage journey, and the documents you will need to complete your mortgage application, read our detailed explanation of the mortgage process.
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