1 in 10 Brits deterred from applying for a mortgage due to a poor credit score

12 Apr, 2022

Poor credit scores have deterred one in 10 Britons from applying for a mortgage, according to new research by The Mortgage Lender (TML).

The research also suggested evidence of a limited understanding of credit scores among the population. Nearly two-thirds (62%) of the 2,000 UK adults surveyed for the research said they did not know their credit score, with half (50%) of those who plan to buy a property in the next year unsure about their score.

In addition to not knowing their score, many were unsure how to improve it, nor did they appear to have much interest in doing so. Nearly two-thirds (60%) of respondents said they had never taken steps to improve their credit rating, while a further 13% said they weren’t clear of what steps they should be taking to improve their credit situation.

Fewer than one in five (18%) of those surveyed said they had taken steps to improve their credit score.

Peter Beaumont, CEO at The Mortgage Lender said: “The number of people who don’t know their credit score, despite wanting to make big purchases like buying a house, is a worrying trend. It shows there is a need for education among UK adults on what their credit score is, how it could impact major buying decisions such as home buying, and how to improve it.

“With house prices rising rapidly, it’s already a challenge for many buyers to either get on or move up the property ladder and understanding your credit score early on will help you to plan ahead and access finance when you need. “

The research also found that more than one in 10 (12%) of people who applied for a mortgage in the UK were denied, and a poor credit score could be the reason for this result.

Peter Beaumont continues: “With prices rising across the board, it can be tempting to take on too much debt but be wary of ‘too good to be true’ products and services. This will help to ensure you don’t take any unexpected hits to your credit score. Buy Now Pay Later products for example, can cause problems later down the line should you miss a repayment or pay late.

“In addition to the negative financial impact many have experienced due to the pandemic, people across the UK will be feeling an additional pinch in the coming weeks due to the rising cost of living. But a small blip on a credit score shouldn’t mean they are automatically excluded from a mortgage. Specialist lenders can support, where often the high street cannot, by offering products suitable for those with less than perfect credit scores. Talking to a mortgage broker will help to ensure you can find lenders that can help with your property ambitions.”

For those unsure about their credit score and how to improve it, there are some simple steps that can be taken. These include:

  • Registering on the electoral roll at your current address
  • Making regular payments like bills on time
  • Building your credit history by using – and then paying off on time – a credit card