How fast can I improve my credit score to buy a house?

How fast can I improve my credit score to buy a house?

author: Adele Kitchen

By Adele Kitchen

When you apply for a mortgage, many factors are taken into account, such as your affordability - not just your credit history. But a good credit score can boost your chances of acceptance and help you to get lower interest rates.


Exactly how long it’ll take to improve your credit score will vary depending on things like: 

  • How good your credit history is to begin with (it’ll take longer if you have negative markers on your credit report such as defaults or CCJs)
  • How quickly credit reference agencies update your records with new information (which varies depending on the agency and when lenders report to them)
  • How quickly you pay off your debts (the quicker the better)

Even so, there are ways you can improve your credit score quickly. We show you how to do so, to get on the housing ladder - or move up it.

1. Set up direct debits

Did you know that missing just one payment could knock around 130 points off your credit score? It could make the difference between getting accepted or rejected for a mortgage. So if you haven’t done so already, set up a direct debit for each of your bills. That way, you’ll never forget a payment.

It only takes a matter of minutes to give creditors permission to set up a direct debit. You can usually do it online or over the phone. You’ll just need your bank details to hand (such as your sort code and account number and the name and address of your bank).

If you have a bad credit history to start with, don’t worry. Over time, bad credit histories can be replaced if you manage your money well going forwards.

Tip: Once you’ve submitted your direct debit request, it can take around 10 days to set up. So make sure you keep on top of any payments that are due in the meantime.

2. Pay more than the minimum

It’s best to pay at least the minimum repayment towards your credit card each month. By only making the minimum payment, your credit card debt can take a long time to go down. This is because you’re mainly paying the interest rather than the balance itself.

So if you can afford to, we suggest you pay more than the minimum amount. The more you can put towards the balance, the less you’ll pay in interest overall. Plus, your credit card will be paid off quicker and your credit score will increase as a result. It will also help you to avoid late fees and negative markers on your credit report. So bear this in mind when you’re setting up your direct debits.

Ideally, if you can clear the balance in full and on time every month then you won’t pay any interest at all (unless you use your credit card to withdraw cash).

3. Consider joining The Rental Exchange Initiative

Are you a tenant who always pays their rent in full and on time? If so, you could boost your credit score and, in turn, your eligibility, by joining The Rental Exchange Initiative for free.

This initiative records rental payments on your credit report. So as long as you keep up to date, you’ll be able to build up your credit score over time - just like homeowners.

Note: This information will only be seen by the lender if they check Experian’s database. If they use a different credit reference agency, they won’t be able to view this data.

4. Register to vote

You can boost your credit score by around 50 points by registering to vote, and it only takes about five minutes online! Simply visit the government’s website and to check your eligibility and enter some basic details. Or print out this form and post it to your local Electoral Registration Officer.

You may be wondering what this has got to do with your ability to get finance. Well, lenders review the electoral roll for signs of reliability. They can check that you live at a stable address and you are who you say you are.

5. Reduce your credit utilisation

The less debt you have the better your chances of getting accepted for a mortgage (with no guarantees, of course). But did you know that there is a certain threshold you should be aiming for to boost your credit score?

You can make great strides in increasing your credit score if you can get your credit utilisation down to around 20-30%. In other words, you should aim to only spend 20-30% or less of the credit limit on your overdraft and credit cards.

We appreciate that this can take time, but it will be worth it in the long-run. Maxing out credit cards can be seen as a red flag by lenders. Whereas having low levels of debt, shows that you’re a responsible borrower who isn’t reliant on credit.

Find out how to start reducing your debts today.

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6. Dispute incorrect default dates

We recommend that you dispute any incorrect default dates. Defaults are negative markers that creditors can apply to your credit report if you miss three to six payments. They can knock around 350 points off your credit score, damaging your chances of approval for a mortgage.

Defaults remain on file for six years from the date of registration, until they naturally drop off. The only way you can get them removed any earlier is if they were applied incorrectly.

If you check your credit file and notice that a debt should’ve defaulted a lot earlier than it did, then you can ask the lender to backdate it. If they agree, then the default could drop off a lot sooner than expected!

What else can I do about defaults?

If you pay off a defaulted debt within the six years, then the status will be updated to ‘fully satisfied’. This may help to improve your credit score.

If these options aren’t open to you, all is not lost. The impact that defaults have on your credit score will reduce as time passes by. Especially if you’ve been managing your money well. Lenders often pay more attention to your recent financial behaviour than your old behaviour.

Tip: You can check your credit report for free using the three main credit reference agencies in the UK: Experian, Equifax and TransUnion. You can also check your credit score for free using CredAbility, who works in partnership with Equifax.

7. Fix other mistakes on your credit report

Whilst you’re at it, have a good read of your report and check if there are any other mistakes lurking about. Common errors include: 

  • Incorrect spelling of your name
  • Wrong address
  • Unfamiliar applications or accounts (could be a sign of fraud)

Simple errors like these can show as red flags to lenders. They want to see evidence that you are who you say you are. If your application and credit report don’t marry up, then it could throw a spanner in the works.

If you spot any mistakes, ask the lender or credit reference agency in question to update it for you. Just bear in mind that there’s no guarantee that they will accept your dispute, and they may ask for evidence to back it up.

8. Remove old financial ties

Old financial links who have bad credit histories could hamper your chances of getting a mortgage. Although being connected to someone with bad credit shouldn’t bring your credit score down, it may show as a red flag to lenders.

The best thing to do is to remove old ties from your credit report by contacting the credit reference agencies and asking for a ‘notice of disassociation’. Make sure you close the joint accounts first. If there's an outstanding balance left, then they won’t be able to remove it from your file.

Tip: Each credit reference agency holds different information about you. So you’d need to contact each agency separately to get your records updated.

The bottom line

How soon you can improve your credit score varies from one person to another. It mainly comes down to your starting point and how quickly you can afford to pay off your debts.

It doesn’t take long to make simple changes like register on the electoral roll or set up direct debits. But it can take months of maintaining payments on time, every time to build up a good credit history.

Also, bear in mind that having a good credit score doesn’t guarantee that you’ll get your mortgage approved. Each lender will use their own criteria, so you may be accepted by one lender and turned down by another.

There are lenders out there that specialise in providing mortgages to those with less-than-perfect credit scores, but the interest rates tend to be higher. So if you want to get the most competitive deals, consider making these changes and waiting a bit longer for your score to improve.

Find out if now is a good time to buy a house. 

Disclaimer: All information and links are correct at the time of publishing.

author: Adele Kitchen

By Adele Kitchen

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How fast can I improve my credit score to buy a house? How fast can I improve my credit score to buy a house?