Steps to Assess and Improving Your Credit Score

Mortgage Essentials , First Time Buyers


I’ll guide you through the crucial aspects of checking and improving your credit score, a number that wields significant power in your financial life. Let’s dive right in.

What exactly is a credit score, and why should you care? Well, a credit score is a numerical representation of how trustworthy you are when borrowing money. Lenders use it to decide whether to lend you money or not. Think of it as a financial report card. In the UK, the key players in this game are Experian, Equifax, and TransUnion.

Your credit score isn’t just a random number; it’s derived from your credit report. This report contains a comprehensive history of your financial behaviour. Every time you apply for credit, make a payment, or miss one, it’s all in there, shaping your creditworthiness.

How do you discover your credit score?

You can access it through Experian, Equifax, or TransUnion, but it may come at a cost. Experian charges £14.99 per month, Equifax £7.95 per month, and TransUnion £14.99 per month for their services. However, you can get a 30-day free trial from Check My File, which produces a report on all three mentioned.  Click here

Why might you have a poor credit score?

There are several potential reasons. Missed payments, bankruptcy, or a County Court Judgment can all tank your score. Even if you make only minimum payments on your credit cards and loans, lenders may see you as a risk. If you’ve never borrowed money, your score might not be great, as there’s no evidence of your financial management skills.

Can you improve your credit score?

So, how can you improve your credit score? There’s no magic bullet, but there are steps you can take. Firstly, set up Direct Debits for all your credit agreements to ensure you never miss a payment. Being on the electoral roll adds stability to your profile, which lenders like, and helps with ID checks.

Make sure all your accounts are registered at the correct address. You can also consider credit builder cards, designed for those with poor credit. Just be diligent in paying them off in full each month. If you have unused cards, consider cancelling them. Having too much available credit can raise red flags with lenders.

What if you get rejected for credit?

Don’t panic, and do not immediately apply elsewhere. Lenders can see your applications, and multiple rejections in a short time can make you appear desperate. Instead, ask the lender why they turned you down, and once you identify the issue, address it before reapplying.

How do you correct mistakes on your credit report?

And finally, how do you correct mistakes on your credit report? If you spot an error, contact the lender that provided the incorrect information to the credit reference agency. They should rectify the problem and inform the agencies to update your report. In the meantime, you can add a 200-word ‘notice of correction’ to your report, explaining your side of the story, which lenders will see. Equifax has a guide on what further steps you can take if the problem remains unresolved.

In conclusion, your credit score is a critical aspect of your financial life. Understanding it, monitoring it, and taking steps to improve it can pave the way for better financial opportunities. Remember, it’s a journey, not a sprint. Take control of your credit, and it will serve you well in the long run.

Ready to make informed mortgage decisions? Contact us for expert guidance. Our experienced team of mortgage specialists is here to assist you every step of the way. Whether you’re a first-time homebuyer, home mover or looking to refinance, we can place you with the right experts to provide personalized advice tailored to your needs.

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