How To Improve Your Credit Score
If you’re shopping for a mortgage, you may get asked about your credit score on a fairly regular basis. If, though, you’re unfamiliar with the concept of a credit score, you may be a little confused about what it is, how you get one, or even how you make one better so you can get a great rate on your mortgage. If credit scores are defeating your home shopping process, this guide is for you. Here, we’ll not only define the terms you need to know but also take you to step by step through some things you can do to make certain that your credit score check looks great when your mortgage broker or lender pulls it to qualify you for a fantastic home loan.
What Is My Credit Score?
If you’re not really familiar with the idea of credit scores, you’re probably asking yourself “what is a credit score, anyway?” Know this – you’re not completely alone. A credit score in the UK is essentially a three-digit number that tells lenders whether you’re reliable when it comes to repaying the money after you’ve borrowed it. A credit rating check gives a lender a range of score options that run from very poor to excellent. The higher the number, the more worthy lenders deem you to be.
Typically, the lenders hang on to your history for the past six years. Each company offers a different three digital scale. With Experian, your credit score is out of 999. With Equifax, you get a score out of 700. With TransUnion, you get a score out of 710.
How Do Lenders Check Credit Scores?
Three different agencies produce credit reports UK lenders can use. Those agencies include Experian, Equifax, and TransUnion. The companies run a UK credit check for lenders, but they also offer a credit history check for landlords and employers. The biggest reason for these parties to check your credit history is to understand what your history of repaying loans looks like. Other parties sometimes run a credit check, though, to do an identity verification.
In some cases, lenders just check credit scores for UK borrowers with just one agency. In others, though, they will check with more than one agency to better understand your overall score. Lenders, though, don’t just look at the score itself. Instead, they each have an algorithm they use on that score and along with other elements to help decide whether you are a good risk.
The process to check credit history works like this. When you approach a lender or a broker to apply for a mortgage, you’ll complete a fairly long application form to get a UK credit report. You’ll provide lots of information on that form. Typically, it will ask for your full name. If you’ve ever changed your name, it will ask about any previous names you’ve had. It will ask about your addresses for the past three years. Naturally, you’ll need to provide your date of birth as well as your contact details so the lender can reach back out to you. Additionally, you need to report your employment status right now as well as how much you make on a weekly, monthly, and yearly basis. The application will also likely ask you about your residential status. Maybe the most important information you provide, though, is the other credit commitments you currently hold like those that go to your credit cards, other loans, or mobile phone plans. It may ask you how much you have in your accounts – essentially asking you to total your money. Credit score, then, is based on all of these answers.
It is vital that you make sure you offer information that is up-to-date and accurate. A lender will automatically reject your application if they find any differences between it and official records like the electoral roll. Credit score accuracy is important to lenders, and if you don’t report the information accurately, they may believe that you are a financial risk or, worse yet, a potential fraudster who may be working through a money laundering scheme. They have a legal duty to prevent this, thus they will reject your application if they believe you are trying to do something illegal.
Once you’ve completed the application form, the lender will pull the files that the credit reference agencies have on you. This one process is formally called a credit check.
There are essentially two different ways a lender can check your credit score. A hard credit check is when a lender makes a full search of your credit report. The check is recorded, so anyone checking your credit in the future can see that you applied for credit with that lender. This can be a problem if you make several different credit applications in a small amount of time, as you will look like you’re desperate for a loan.
The other type of credit check a lender can run is a soft credit check. This is a way for a lender to understand whether or not your application will be successful without doing a full credit check. They don’t leave a mark on your credit history, so that can be helpful. If you ask “what is my credit score,” UK lenders will often run this type of credit check.
The Difference Between the Good and Bad Credit Ratings UK Lenders Look For
In the world of credit scores, knowing what is a good rating and what is a bad rating is key. Many people search for terms like “What is a good credit score UK mortgage lenders want?” regularly. After all, a bad score means it may not be possible to get the mortgage you want because a bad score means lenders might see you as a serious risk. What is a bad credit score UK lenders look at? With Experian, a bad credit score is considered to be anything below 721. As with all of the credit score ratings, though, there are degrees of bad. If you score between 0 and 560, you’re considered to have very poor credit. If you score between 561 and 720, you just have poor credit. With Equifax, if you score below 380, you’re considered to have poor credit. With this credit bureau, a score between 0 and 270 is thought to be very poor. A score between 280 and 379 is just poor. With TransUnion, a score between 0 and 550 is thought to be very poor. A score between 551 and 565 is poor.
What Is a Good Credit Score in the UK?
It’s important to note that the credit score for mortgage products in the UK varies from lender to lender. There is no minimum score needed to get a mortgage, but every lender will run a UK check credit score report to learn what yours is before they agree to loan you money. That makes it essential to increase your credit score as much as possible before you apply for a loan.
When a UK lender orders a full credit report, you’ll want your score to fall somewhere between 881 and 999 on your Experian credit report check, somewhere between 420 and 700 on your credit check rating from Equifax, and between 604 and 710 on your credit check the score from TransUnion. The higher any of those numbers from those bureaus, the more likely you are to get a loan on your home. If your credit score is good, you’ll have lots of loan options.
How Do You End Up with a Bad Credit Score in the UK?
There are a lot of reasons you may end up with a bad credit score. The biggest problem is if you’re not making payments or you’re not making them on time. Being chronically late with your payments definitely hurts your credit score. Not making payments at all, though, makes things far worse. It can have a strong negative impact on your score. Another real negative impact on your credit score is serious debt. If you have several open accounts and the balances are too high on all of them, a lender might not feel like lending your additional money that will have to be repaid is the best choice right now. You could also have a credit history that is far too short. Lenders want to see that you’ve borrowed money in the past and been able to repay it to get a great credit score. If you’re just getting started, though, you likely won’t have that long credit history, and that can lead to a bad score.
The most problematic thing a lender might find in your file is a bankruptcy or County Court Judgement (called CCJs) against you. Bankruptcy is where you’ve worked through the government to get relief from any current debts you have. This type of filing stays on your record for six years. A CCJ is just as dangerous. This is when someone seeks a court resolution when you owe them money. If a court formally decides you owe that money to the person, you have a county court judgment against you. That judgment record goes in your file for at least six years.
How Do I Check My Credit Score?
Wondering how to check your credit score? You’re not alone. Learning how to check your credit score in the UK is a must. While a lender will most certainly check your credit score when you go to apply for a loan, you can check your credit score on your own to help avoid any surprises before you try to qualify for a mortgage. Fortunately, it’s fairly easy to check your credit score. In most cases, you can even get a free credit score UK lender report! There are a few different ways to do that. First, you can apply to each of those credit agencies and request one free report each year. This is called a Statutory Credit Report, and they have to provide it to you. The information is, though, only updated month by month, so you’ll want to keep that in mind as you’re viewing your information. You don’t just have to talk to the credit reporting companies to get your report, though. You can also get a free online credit report from several different services. Often you just have to google “Check my credit score UK” and you’ll come up with a company willing to handle that for you. You may have heard about these when you listen to Martin Lewis. Credit score reports are often available from financial gurus and other financial websites. For example, you can get a Martin Lewis credit check for free on his site, but you may be asked to sign up for something else too. While most sites like that offer an introductory free online credit report, most will also push you to buy additional products like security monitoring services and other kinds of help. In most cases, you’ll have to sign up for an account with these services to view your report. There are also several paid subscription services that offer you online credit reports. Some of these can offer you more updated monitoring so that you can continually see what is happening with your score. While most offer a free trial period, you will likely have to pay after about thirty days of service.
You may even be able to come across a credit score calculator as you work to learn the answer to the question “how do I find my credit score?” These calculators can run a fast credit rate check to help you understand how your current behaviour might be affecting your credit score.
How Do You Improve Your Credit Score?
If you believe your credit score isn’t what it should be, you may want to learn how to improve your credit score. Fortunately, it’s easy to learn how to improve a credit score UK lenders review. There are several ways to learn how to increase your credit score. The first thing you can do, if you haven’t already, is register to vote. It’s pretty tough to be approved for a mortgage if you haven’t already registered to vote. The electoral roll is one-way lenders verify your identity, and if you don’t appear on the electoral roll, a credit score for you is almost non-existent. Don’t worry, though. Just because you’re on the electoral roll doesn’t mean you have to vote. You simply need to register to do so, and in the UK, that’s a fairly easy process. You can register either online or by post.
One reason many people choose not to register to vote is that they’re concerned about privacy, but you do have one more step you can take to protect your privacy when you register to vote. You can remove your name from the open register. This allows you to stay on the electoral roll where lenders can find you, but it helps to prevent third parties from being able to purchase any personal details about you and market to you.
Another piece of advice you may come across if you’re working to learn how to boost your credit score is that you’ll want to check for any errors on your credit report. This is more common than you think. In a 2019 Which? In the survey, nearly a fifth of survey respondents had encountered errors on their credit reports. Mistakes can be fairly simple like incorrect addresses or misspellings. Remember that your application has to reflect your report directly or it will get rejected, which means that it’s going to be tough to get a loan for the home of your dreams. As a result, correcting those simple mistakes is an absolute must if you’re looking to improve your credit score in the UK.
In addition to those kinds of mistakes, though, you’ll also want to look for any fraudulent activity when you run your free credit check in the UK. If you see activity on your credit report that you know, wasn’t you, you need to contact the credit agency immediately. It’s possible that you’ve had your identity stolen and someone else is building up debt that you’ll eventually be liable for. The credit agency should not only correct your file, but they should also be willing to put a note in your file to make it clear that you were not at fault and your credit score should not be affected by the actions of others.
Checking your credit report is important, but if you’re looking for information on how to build a credit score in the UK, you’re also likely to learn how important it is to make timely payments. A single late payment could drop your credit score by up to 80 points. It doesn’t matter whether that late payment was on something like a personal loan, your credit card, or even your current mortgage loan, it will drop your score. Just consistently paying on time can make a huge difference in your overall score.
You may also want to keep in mind that if you are looking for ways to improve your credit score, and you have had joint credit with another person over the past six years, your credit files are linked. That is typically referred to as financial association, and if the other person has credit issues, you may have credit issues, too. If that has been a problem, you’ll want to end that association. Close the joint credit account that you share with them, then have the credit agencies add a note to your file that you have disassociated yourself from that person. It can’t change what’s already happened, but it can help to prevent their future activity from affecting your credit.
As you search for information on how to boost your credit score, you may also learn this key tip – avoid applying for an extensive amount of credit as you prepare to apply for your mortgage. Every time you apply for a credit card or a loan of any type, it leaves a hard credit check in your file, and when your potential mortgage lender looks at your credit file, they see those hard checks, which can make it look like you need a lot of credit at the moment.
One last thing you can do to help boost your credit score is to make certain you remove defaults, CCJs and bankruptcies from your file. If you’ve experienced any type of court action or default, ensuring it is removed from your file is an absolute must if you want to improve your credit rating. If it happened more than six years ago, it shouldn’t be on your file, but that’s not always true. Instead, in some cases, you have to check with the credit agency to make sure they remove CCJ from a credit report.
Having defaults removed is a bit different. If you don’t make payments on any account – whether it’s one you hold with a bank, a mobile phone company, or a utility company, the lender closes your account. It doesn’t even matter how much you owe; the lender will close your account and label it in default. This goes on the credit report a lender will pull, and it makes it harder to get new accounts. A default on a credit file remains for six years, even if you pay that debt off. In some situations, those defaults can result in a CCJ. It’s key to learn how to get a default removed from a credit file. As long as you pay off what you owe within 30 days, the additional CCJ won’t be added to your file, but if you don’t, your credit report will not only show evidence of the default itself, but also the CCJ, which can be problematic if you’re looking to get a mortgage on a home. Many people ask “Does a CCJ show on a soft credit check?” The answer here is absolute.
If you’re working to learn how to increase your credit score in the UK, reducing the impact is a must. You can typically reduce the impact of either a default or a CCJ if you tell the credit agencies why you missed those payments. Often if you were unemployed or seriously ill, they can add a note to the file so that lenders can see what the problem was in the first place. Lenders may still choose not to loan to you, but it will at least help to address the problem.
How Do You Build Your Credit Score When You’re Just Getting Started?
If your credit score is low because you don’t have a real credit record, there are several ways to learn how to boost a credit score UK lenders consider. There are a number of things you can do to build it. If you want to know how to get your credit score up, start by keeping in mind that simple things like a mobile phone contract can help you build your credit. Paying your utility bills on time can also help you build your credit score. Additionally, getting an interest-free credit card may prove useful as you work to learn how to increase your credit score. To make it work, though, you have to pay it off in full each month. Keep in mind that you’ll want to keep the utilisation of your credit fairly low, less than 50%.
Work to Improve Your Credit Score Before You Apply!
If you’re applying for a home loan shortly, it’s essential that you understand both how to get a credit score and how it impacts your mortgage as a whole. Work to learn how to build up your credit score, then run a credit check free at UK sites to understand what numbers you’re facing before you even begin home shopping. Then you’ll be ready to apply for a great home loan.
FAQs
Not sure you have all of your UK credit score questions answered? Here are a few of the most commonly asked questions about credit scores in the UK.
Where Can I Learn More About How to Improve My Credit Score?
If you’re still asking yourself “How can I improve my credit score,” you may wonder where you can turn to learn more. There are lots of places to turn to learn more including government websites and various lenders who have lots of information about how to improve your credit score. On sites like these, there are many pieces of advice you might come across as you learn how to get your credit score up. If you’re looking to build a credit score in a positive direction, be sure to read as much as you can and work to use the advice you read online. Improving a credit score can take time, but if you keep at it, you’ll eventually find success. Once you know your credit score improve UK plan, put it into place and keep moving forward. Don’t forget to regularly get a credit score on UK free websites so you can track your progress.
How Do I Improve My Credit Score If My Ex Ruined It?
If you’re searching for information like “How do I improve my credit score after divorce or separation,” know that you’re not alone. Thousands search for terms like “How to get a better credit score” in your situation regularly. Use search engine terms like “check my credit rating” to learn what your score is right now. Once you’ve done that, you’ll want to see what accounts the two of you still have open together. As soon as possible, close those accounts. Then contact the lender to let you know that you’ve disassociated yourself from that person so they can put a note in your file. That note will help protect you from any future problems they have, but you will have to wait to see a change in your credit score over time, as any mistakes your ex made will still be on there for at least six years.
How Long does it Take to Improve a Credit Score UK Lenders Consider?
Looking for some information on how to build your credit score? It starts when you order a credit report free on UK sites. Often if you just type something like “my credit rating” into a search engine, you’ll be able to find what you want. You can also just type in “check my credit,” or “how do I get my credit score checked online.” Many people worry about running a credit check on themselves but don’t worry. If you run a UK credit score, check on yourself, it’s not considered a hard credit check. It won’t impact your credit score rating. Instead, when you order a free credit report in the UK, it’s considered a soft pull, and you’ll be able to see your credit score in the UK for free, but you’ll also avoid a hit to your credit report. If you’re not happy with what you see, it may help to read some articles under the “how to build my credit score” sections on government and lender websites. Often, they can give you advice on how to build up a credit score even when it’s in bad shape. Things can stay on your credit report for at least six years, but you can make small improvements over time. A regular free credit score check in the UK will help you see those tiny improvements as you work to clear debt from your credit report and make payments on time. Use a free credit check UK website regularly to see how things are changing so you know when the right time to apply for a loan might be.
How Do I Find Out My Credit Score in Another Country?
Your credit score is essentially international. Credit checkers aren’t necessarily the same from country to country, but the three main bureaus in the UK also have a presence in other countries, so in some cases, the credit score checks UK lenders pull may show the same credit score on an international level. If you’re wondering how to get a good credit score in other countries or you’re wondering how to get a credit score in other countries, the best thing you can do is contact a lender in that country.
What is the Minimum Credit Score to Qualify?
That question is a bit vague. If you’re talking about the minimum credit score for mobile phone contracts UK providers offer, it’s rather low. If you’re talking about something as big as a mortgage, though, it’s quite a bit higher. There is no minimum credit score for a mortgage in the UK. Credit reports UK lenders pull, though, will tell them more about how big of a risk you are no matter what type of loan you’re looking for. Most lenders of any type want to deal with people who have at least a “good” credit rating.
