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What is a credit score and how can it affect a mortgage application?
Posted: 16th Nov 2020


What is a credit score?

A credit score, or credit rating, is a number that depicts a consumer's creditworthiness. Generally, the higher the score, the better a borrower looks to potential lenders when considering whether to grant credit to them or not.


How is a credit score calculated?

Your credit score is an automatic calculation taking into account your credit history, the number of credit accounts you have, your debts and your repayment history your residential status and your credit search history. This will include credit agreements such as loans, mortgages, credit cards, payday loans and mobile phone contracts.


What can affect my credit score?

There are several factors which can affect your credit score. The most likely impacts on your credit rating will be:

  • Missing payments
  • Applying for many credit accounts in a short amount of time
  • A high amount of debt
  • Whether your earnings are likely to cover payments
  • If you are registered on the electoral roll


How can your credit score impact a mortgage application?

During a mortgage application process, a lender will make various document checks which require proof of address, bank statements and so on to verify an applicants income and identity. Additionally they will likely undertake a credit search to see if they’re a good prospect to lend too. Most lenders set a minimum credit score that the applicant must meet or their mortgage application would be rejected. Therefore, although it’s not the only factor in getting a mortgage, if your credit score is low due to possible debts or repayment issues you’re less likely to be accepted by a lender.


Can I change my credit score?

Yes, you can improve your score over time, if you make the required changes. Here are five ways to improve your credit score:

  • Keep on top of monthly payments e.g. phone bill and stay within any agreed credit limits
  • Keep track of current credit accounts and don’t apply for too many at once
  • If you do have any outstanding defaults or County Court Judgements (CCJ’s) ensure these are repaid as soon as possible to start improving your score again.
  • Only apply for credit that you know you can afford
  • Register to vote at your current address if you haven’t already.

Your home may be repossessed if you do not keep up repayments on your mortgage.