10 Ways to Boost your Credit Score Before Applying for a Mortgage

When you apply for a mortgage, your mortgage provider wants to see that you can keep up with the mortgage repayments, even if interest rates rise. They consider your circumstances, income, outgoings, and credit history to calculate a credit score. 

The higher your credit score, the higher your chances of being accepted for a mortgage of your desired amount. If your credit score is low, it may be hard to get a deal, as providers may be wary of lending to you.

We spoke to mortgage expert, Terry Higgins, Group MD for TNHG New Build Mortgage Services, who answers the most pressing questions when it comes to improving your credit score to benefit your mortgage application.

Look at your credit history

It’s a good idea to check your credit history if you’ve never done so before or it’s been a long time since you did. Browsing the Experian, Equifax and Callcredit reference agency websites is free and easy. Each has different information about you, so it’s best to check all three before making any mortgage applications.

Terry explains:

“Your credit score is one of the first things we check as we prepare a mortgage application. Most mortgage lenders use your credit score to understand how likely you are to keep up repayments on your mortgage. Every lender has a different set of eligibility requirements, so there is usually a lender to help most people borrow to buy a house. 

While a credit score might be a numerical figure, most lenders will look at your wider credit profile in detail, which includes who you have lending with, how much is outstanding, and how consistently you make payments on time.”

1. Check for mistakes

Is there something on your record that shouldn’t be? Does one of your bank accounts still have your old address? Perhaps your name is spelt wrong somewhere? These are simple to fix by getting in touch with your bank, energy provider, or other institution which may have incorrect details. 

Terry adds:

“Being aware of your credit score is important for a lot of steps in your life, but none more so than when you're applying for a mortgage. Thankfully, there are now a wealth of credit monitoring tools and apps that are free, which provide regular updates on your score.

“Credit reports are usually very accurate reflections of our financial health, but mistakes can happen. Making sure you access your report regularly means you're able to spot anything you don't recognise and ask for more information.”

2. Close inactive accounts

Your credit report may show inactive bank accounts, credit cards or store cards. If this is the case, cancel or close them as soon as you can. 

“Your credit score is impacted by many factors and can be extremely complex so it would be difficult to answer yes or no depending on your circumstances. Having a credit facility that you don't use, being close to your credit limit and having multiple credit facilities can all play a part in forming your credit score. Making sure you understand your credit file is the most important advice I can share.”

3. Manage your available credit

Your available credit amount is what you have available to spend on your credit cards and overdrafts. Most credit cards will allow you to increase the amount you have available to borrow, but having more money at your disposal doesn’t necessarily equate to being in a better position financially from a lender’s perspective. 

“Different types of credit are treated in different ways when it comes to applying for a mortgage. As each lender also takes a different approach to how they model a credit file when considering a mortgage application, getting advice from an independent mortgage adviser is important. Not only can they help you apply for a mortgage, but they can also help you plan for an application you'll be making in the future, together with proactive steps you can make to put yourself in the best position possible.”

4. Apply for a notice of disassociation

“We all take joint credit agreements with people for various reasons. It might be a joint current account with your partner, or a mortgage with a friend. Either way, if that relationship changes it may be in your best interest to have that financial association removed. You do that with a notice of disassociation.

“It might be you no longer have a relationship with that person, and if their adverse credit history is impacting your score, you might need to do something about it.”

5. Make all your payments on time

You want to show that you can manage your money well, so don’t delay any payments whether this is rent, a utility bill, or a mobile phone bill. Any missed payments will show on your credit history (even if you’re only a day or two late) for six years, meaning it can impact your credit score significantly.

“A mortgage application involves a lender assessing whether you're a suitable candidate for a mortgage and able to make the monthly payments on time. Part of that assessment is looking at your credit history. Therefore, it is important that payments are made on time to all creditors as late or missed payments can reduce your credit score.”

6. Register to vote

Your mortgage provider will check the electoral register to confirm your identity and address. 

“Being registered on the electoral register helps to improve your credit score as it helps credit reference agencies determine that you live at a particular address. However, it's not just credit reference agencies that use the electoral register to identify you. Registering to vote can also help you get access to insurance, legal, accounting and some public services like getting a passport.”

7. Have a decent deposit

Larger deposits will show your mortgage lender that you have the funding abilities to back up your loan and may also secure you a lower interest rate. While it may mean you spend longer saving for your deposit, you could benefit in the long run, rather than rushing into a high interest, low deposit agreement. 

“In simple terms, the larger the deposit, the less you must borrow and the lower the risk for the lender. Generally, the bigger your deposit the more choice of mortgage products and the lower the interest rate will be.”

8. Don’t apply for more credit

When you apply for credit and a lender checks your credit history, a mark is left. If you make several applications within a short period, this can look like you’re desperate for money. As a rule of thumb, you should aim for a buffer of at least six months before applying again.

“There are two types of credit search. There is a soft search and a hard search. Soft searches don't usually show on your credit history and therefore affect your credit score however a hard search does, and multiple hard searches done in a short period of time can make it seem like you're struggling to get credit, and so a lender may view you as being a higher risk.”

9. Pay off your debts

If you have debts, now is the time to pay them off. If you have several debts and struggle to keep track of your monthly payments, set up direct debits to ensure you don’t miss anything. There are financial tracking apps you can use to help you with this, and many banks provide options to view your spending trends. 

“Everyone's circumstances are different, and advice from an independent mortgage adviser is always helpful when thinking about debt management. However, a good rule of thumb is to always work on your most expensive debt first, that is those with the highest interest rates.”

10. Contact a mortgage broker

It’s a good idea to contact a mortgage broker before you start looking at mortgages. They’ll look at your personal circumstances and may find exclusive mortgage deals.

“If you have anything on your credit profile that might mean your score is less than perfect, a good mortgage broker will know which lenders will be able to help you. It is always important to speak to a mortgage broker as early in the process as possible as they will be able to give you practical advice on how to best prepare for your forthcoming mortgage application.”

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