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Our Mortgage and Protection Adviser, Donna Wilson has provided us with some fantastic information on how to understand your credit score, along with some simple tips to help improve it.

Your credit score is a tool used by lenders to help them assess whether you qualify for a particular financial product i.e., an overdraft, credit card, loan, or mortgage.  They use both public and financial records to help check your repayment history and trace if you are on the electoral roll.  The higher your credit rating, the better your chances are of being accepted for credit, meaning it is crucial to have a good credit score.

There are many ways in which you can improve your credit score, such as:

• Make sure you are on the electoral roll at your current address
• Build your credit history – often having no credit makes it difficult for companies to assess you, as they are unable to track your ability to pay
• Pay your credit commitments on time and wherever possible, pay in full each month – late payments have an adverse effect on your score
• If you have a credit card, try to use less than 50% of the limit
• Check your credit file regularly, to make sure there is no unusual activity or unresolved disputes
• Minimise credit checks if possible, as lots of checks can reduce your score
• Close any unused credit accounts – having a high overall credit limit may be deemed negatively

It is also beneficial to know that if you take out a joint commitment with someone, this makes you a financial associate and you are both essentially linked to one another.  What you may not realise is that you can both affect each other’s scores, which in turn could affect your current and future applications, so it is crucial to understand each other’s financial behaviour before making this commitment.

Often, lenders have different criteria, meaning if you do not qualify with one, you may qualify with another.  If you are turned down by a lender, it is worth checking why this has happened before applying with another – get a copy of your file and check its accuracy.  Incorrect information can be removed, and your file updated.

If you would like further advice on your credit score, or anything mortgage related, contact a member of our specialist team.  We have advisers on hand at our Dalston, Dumfries, Penrith and Workington offices.