What is a credit score?

A credit score is a number that estimates your creditworthiness based on your credit history over the last few years. “Credit history” means everything from how many credit cards you have, to your outstanding loans, to how timely you are with your monthly repayments.  

In terms of buying a house, lenders assess your credit score when you apply for one of their mortgages to decide whether you’re likely to repay the loan.

The difference between your credit score and credit report

Although they’re closely linked, your credit score and credit report are two different things.

Your credit score is an indication of your credit report, giving lenders an idea of how well you manage credit.

Your credit report is a breakdown of your credit history. It shows lenders details of any loan agreements and any missed or late payments, giving a clearer picture of your financial situation and helps them decide whether you’d be a trustworthy borrower.

Mortgage offer

What is a good credit score?

If you have a track record of paying your bills and credit on time, you’ll be judged to have a good credit score. 

This gives you an advantage when applying for a mortgage, as lenders will deem you a safe bet to lend to.

With a better credit rating, you’ll get a better chance at accessing the more competitive rates compared to customers who apply with lower credit scores.

What affects credit score?

If you’ve defaulted on a loan it will leave a mark on your credit score.

A County Court Judgement (CCJ), a court order registered against you if you fail to pay money that you owe, would also have an impact.

In both of those situations your credit record could be affected for six years, though the more recently they occurred the more impactful it will be.

The impact of some missed payments are more severe than others. It sounds obvious, but paying your rent a couple of days late would not be treated as seriously as going bankrupt.

Having little credit history

You could also have a low credit score without making any mistakes, and more due to a lack of credit activity. 

If you’ve been living abroad, or are a student, you're likely to have a lack of a credit history, which means there are limited examples of you taking out credit in order for lenders to judge how creditworthy you are.

Likewise, bank accounts that are empty and unused can also impact your credit score.

If you’ve got a limited history, your past dealings with lenders may help you get credit with that same lender.

Apply with confidence

Can I get a mortgage with bad credit?

Depending on your situation, there are options for you if you have bad credit

There are a whole host of specialist lenders who may be willing to accept some blips on your credit record, providing they’re satisfied that you won’t have issues again.The downside with using these lenders is that they will likely charge a higher interest rate than a mainstream lender, or expect a bigger deposit.

How can I check my credit score?

You can get a free credit report from one of the main credit reference agencies: Experian, Equifax, and TransUnion.

Asking for your credit report doesn’t affect your rating.

The report should show you what’s impacting your score, which could help you improve it.

If any reports have errors on them you can contact the company that made the error, who will then pass this on to the credit rating agencies.

How can I improve my credit score?

  • Take a break from applying for credit - Lots of credit checks over a short period can negatively impact your credit score as it makes you look desperate.

  • Pay off your debt - If you have multiple forms of debt, it may be worth paying off some of them so you don’t appear overburdened.

  • Keep up with credit payments - using a direct debit can make this process easier.

  • Take out small amounts of credit - You can take out small amounts of credit like an overdraft or credit card, providing you repay them. Keep in mind that if you miss a payment it would do more harm than good.

  • Keep your credit card borrowing low - If you have multiple credit cards keep your borrowing below 25% of the total limit.

  • Get yourself on the electoral roll - As mortgage lenders use it to confirm your name and address. Not being registered can impact your score. If you’re not eligible to vote, you should send a proof of address to a credit rating agency instead.

  • Keep your contact details consistent - Make sure you provide the same phone number and job title across your applications, and try to avoid moving house or switching banks too often.

What are soft and hard credit searches?

When lenders look into your credit score they may carry out a ‘soft’ or ‘hard’ search.

What is a soft credit check?

A soft credit check can be when you check your own credit score or when a company checks it while carrying out a background check.

‘Soft’ searches are visible on your credit report, but only to you, so they don’t affect your rating like a ‘hard’ check can.

What is a hard credit check?

Hard checks are used to view your complete credit history. This type of check will be carried out by lenders when you apply for credit, such as a personal loan, credit card, or mortgage.

Each check will show on your records and could damage your credit history if they show up too often in a short space of time.

What happens if I get a mortgage with a friend or partner?

If you apply for a financial product with someone else it will link your financial histories, meaning their rating will affect yours and vice versa.

Applying for a mortgage together could boost the amount of could borrow, though if one of you has a poor credit rating it may not be such a good option.

If you have a former partner with debt or credit problems you should let credit ratings agencies know that you’re no longer connected.

Frequently asked questions (FAQs)

Does being a guarantor affect your credit score?

If borrowers keep up with their repayments guarantors aren’t affected, though it will be added to the guarantor’s credit report if there’s a missed payment. 

Lenders will generally only accept guarantors with a strong credit history.

Does having an overdraft affect your credit score?

It could if you’ve been overdrawn for a long time, as it suggests you can’t effectively manage your finances.

Can I get a credit card with a bad credit rating?

Sometimes, but it will reduce your options and you may end up paying a higher interest rate.

How do earnings affect your credit score?

Your credit score isn’t dependent on how much you earn, as managing what you owe is considered more important. 

However, you'll need to earn enough to have some disposable income, as well as enough to repay the mortgage you’re applying for.

When to expect a credit check

Each lender has a different process when it comes to running credit checks. However, some will carry out a soft credit check before issuing you with a Mortgage in Principle.

A soft credit check gives lenders a rough idea of whether they’re prepared to lend to you.

The'll later confirm this by running a hard credit check once your full application has been submitted.

More lenders are now going straight to running a hard credit check when issuing a Mortgage in Principle.

If they run a hard credit check at this stage, they won’t run another one once your application has been submitted - only one hard credit check is necessary in your mortgage application.

However, if there’s a significant amount of time between receiving your Decision in Principle from the lender and submitting your application, the lender may decide to run another hard credit check. They’ll only do this with your permission.

All mortgage guides, calculators and deals

Trussle holding phone icon

Get a mortgage with Trussle today

  • Fee-free online mortgage broker

  • Rated 4.9/5 on Trustpilot - the UK's top rated online mortgage broker

  • Thousands of deals from 90 lenders

  • Straightforward online application process

  • No waiting for appointments

  • No paperwork

  • Free ongoing mortgage monitoring

Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

What people are saying about Trussle...