Everyone who lives in the United Kingdom has their own credit history, so-called credit score. If you are a foreigner, it starts building from the first day of moving to this country. British nationals, in turn, start creating their credit history from the moment they become adults. The credit score is publicly available and every citizen has a right to see his own credit history. You can receive such report from a credit reference agency. Three of the biggest British agencies are:

A credit score is influential in terms of what financial services you can obtain including credit cards, loans, and mortgages. This rating determines whether a specific bank will give you a loan. In some cases, your credit score will also have an impact on the interest rate of the loan. That’s why it is obvious that we should avoid situations which could negatively influence our rating.

That’s why is it obvious that we should avoid situations which could negatively influence our rating.

What Factors Influence Credit Score In the UK?

These problems may lower our credit score

  • A high amount of current debt. Banks and credit card companies may not be willing to provide you with, for example, additional loan as they believe that your budget is already too tight.
  • Late repayments of a mortgage, credit cards, loans and bills including gas, water, electricity and similar. Late or missing payments will stay in your credit history up to 6 years.
  • CCJ (country court judgment) – court judgements (often by default) for unregulated bills have a powerful influence over the credit history. They will be also visible for 6 years.
  • Building up numerous credit checks from different agencies. In this case, a bank could suspect that a previous lender was aware of additional facts about you and refused the credit arrangement. Credit score lowers each time a new search is completed.
  • Keeping credit cards that we don’t use. Lenders take into account not only the current balance on the credit cards but also the overall limit that you have.
  • Ignoring errors on your credit score report. If on your report you find a record that should not be there, you must immediately inform the credit reference agency so they can do a check and remove false information.
  • Not being registered to vote. Even if you are not willing to vote, remember about registering. It helps to verify your address and increases your rating. You can register on the Internet – it takes only a few minutes.
  • Frequent changes of the address. It can also lower your credit rating.
  • Having a joint account, loan or mortgage with a person who has a poor credit score can also negatively influence your own rating.
  • Changing job frequently. If you are in a new employment every few months, it may lower your credit rating.

How Can You Improve Your Credit Score?

If your rating is marked as poor or you don’t possess a long credit history, the best way to improve the credit score is

  • To stop applying for new loans unless your score has improved,
  • To register for voting,
  • To liquidate all unused credit cards.

The improvement of credit history is also influenced by the regular and timely repayment of current liabilities.

Instead of writing a summary, we would like to give a word of encouragement for those who have been refused a mortgage in the UK – chin up! If you follow our guidance, you can quickly improve your credit score and re-apply for the mortgage.

Therefore, please remember that if a bank refused you once, it doesn’t mean that you won’t receive a credit never again. If you have any additional questions about credit score, please, contact our office on 01536216418.