How do I improve my credit rating to get a mortgage?

J Finance Credit rating

Improve your credit rating before getting a mortgage

Getting the best credit rating will be a great help when applying for a mortgage. You will be a more attractive prospect for more lenders and have a greater choice of products and rates…

What is a credit rating?

Lenders use your credit score to ascertain if you qualify for a mortgage (they also use it for credit cards, loans and other financial services).

Mortgage lenders use the information you supply on your application, along with your credit rating, to create a credit score – this will help them determine whether you qualify for a mortgage, how much you can borrow and potentially what product you might be eligible for.

It helps to show them what kind of borrower you are and how likely it is that you will be able to manage mortgage repayments.

Why is this important?

As mentioned above, your credit score is used to determine whether you are eligible for a number of financial services, such as credit cards, loans – and of course mortgages. You should remember that even if one lender turns you down, this does not mean that all lenders will reject you. They may have different criteria or have alternative products to offer you.

Before you apply to another lender, it is very important that you find out why your application has been rejected, before you make another application elsewhere, as multiple applications within a short time can also have a negative impact on your credit scoring.

However, the better your credit rating is, the more options you will have, which could ultimately save you money.

How credit scores work

A number of factors are used to make up your credit score. A lender will look at how much credit you are using, how much debt you have, whether you always make payments on time and also if you are on the electoral roll and whether you have any county court judgments (CCJs) against you.

10 ways to improve your credit rating

  1. Take a look at your credit file – A good mortgage broker will be able to look at your credit file and work out which lenders will be your best bet. There are three places to get your file from – Equifax, Experian and UK Credit Ratings – it’s worth getting them all as they all show different information, so your broker will be able to build up a really good picture.
  2. Take out a credit card – This may seem odd, but if you haven’t ever borrowed anything, lenders have no idea if you will be a good customer and pay back what you owe. So if this is you, consider taking out a credit card. You don’t have to make big purchases – use it for your petrol or shopping and pay it back on time each month to show you are a responsible borrower.
  3. Check your credit file is up to date – make sure addresses and linked names and addresses are up to date. Pay up and close anything outstanding – especially if they are registered to a previous address.
  4. Amend any credit report errors – If there is inaccurate information about payments history, CCJs or arrears – get it set right, You will need to contact the provider and provide written evidence of any errors.
  5. Make sure you are on the electoral register – This makes sure the lender can see where you live, and that you aren’t likely to disappear! It’s an easy one to put right, too
  6. Make sure payments are made on time – You need a good six months or so of payments being made at the right time, ready for when you apply for your mortgage.
  7. Stay within your limits – Using your overdraft all the time can have a negative effect on your credit score. Try to curb spending where possible – draw up a budget and stick to it. Cancel any unnecessary direct debits or standing orders (being sure not to cancel any important bills!)
  8. Settle any debts – Concentrate on clearing loans, such as car finance, and credit card debts, as well as CCJs.
  9. Have one bank account – If lenders can see a well-run bank account, with bills being paid on time, this will work in your favour.
  10. Talk to an independent financial adviser – this can help to get everything in order. They will be able to read a credit report and identify any issues, and also help you to focus on what you need to do to get yourself in a good position to start applying for a mortgage.

Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, without obligation, please contact us on 01635 521 300 or email