A good credit score is essential for securing a mortgage and favourable rates. This guide explains how credit scores work in the UK, what affects them, and steps first-time buyers can take to improve their mortgage readiness.
1. Understanding Credit Scores
- Credit scores range from 300 to 850 depending on the provider.
- In the UK, Experian, Equifax, and TransUnion are the main credit reference agencies.
- Lenders use credit scores to assess your reliability and risk.
Score Bands (Experian)
- Excellent: 881–999
- Good: 721–880
- Fair: 561–720
- Poor: 0–560
2. Factors Affecting Your Credit Score
- Payment history: Late payments or defaults lower your score.
- Credit utilisation: High balances relative to limits can reduce your score.
- Length of credit history: Longer history improves score.
- Types of credit: Mix of credit accounts can positively impact score.
- Recent applications: Multiple credit applications in a short time can reduce score.
3. Checking Your Credit Score
- Use free services from Experian, Equifax, or TransUnion.
- Ensure your report is accurate and dispute any errors.
- Check regularly to monitor changes and improvements.
4. Improving Your Credit Score
- Pay all bills and credit cards on time.
- Keep credit card balances low relative to limits.
- Avoid opening multiple accounts at once.
- Register on the electoral roll to improve credibility.
- Maintain a mix of credit types responsibly.
5. Preparing for a Mortgage Application
- Calculate your income and outgoings.
- Reduce outstanding debts where possible.
- Save for a deposit and consider schemes like LISA.
- Get a mortgage in principle to understand borrowing capacity.
- Review lender requirements and eligibility criteria.
6. Tools and Resources
- Credit score checkers: Experian, Equifax, TransUnion.
- Mortgage calculators to assess affordability.
- Deposit and savings planners to track progress.
A strong credit score combined with careful financial planning increases the likelihood of mortgage approval and better rates. This guide complements other resources such as Mortgage Affordability Guide, How Much Can I Borrow?, and Deposit & Saving Guide.
