If you’re thinking of buying your first home and applying for a mortgage, getting your credit position as healthy as possible is certainly going to help.

A good credit rating can not only impact your chances of approval, but it can also impact the rate you could be offered.

When you apply for a mortgage the size of your desired mortgage in comparison to the property’s value (also known as ‘loan to value’) will, alongside your income and expenditure, play a key role in whether you're offered a mortgage. CreditLadder has produced the Ultimate Guide to Getting Mortgage Ready that goes into lots of detail.

It is however essential to improve your credit score before you apply for a mortgage as it will take time.

How credit scores work and how do they affect a mortgage application?

When applying for a mortgage, lenders will typically work with one or more of the main credit referencing agencies (CRAs) in the UK namely Experian, Equifax, TransUnion and Credito.

The lender will contact the CRAs it works with and build a financial history for you, and this will form part of the final decision. A good score will help you on the path of getting a mortgage, but a poor score could well work against you - it’s not unknown for a lender to refuse a mortgage based on an outstanding query on your credit file irrespective of the amount involved.

5 top tips for improving your credit score

1. Check your credit report

The first thing you should do is get hold of your credit report. One of the best ways to do this is through Checkmyfile. Their credit report is the only way to check data from all four of the main CRAs in the UK. Alternatively, you can contact the CRAs directly.

Knowing what your rating is with each agency will give you a great benchmark for improvement.

2. Make sure your credit information is correct

This is something you must do before considering a mortgage application, or indeed any loan application. If the information is incorrect or out of date, it can stop you from getting a mortgage. Check the information on your credit reports are accurate. If you see anything that is inaccurate you should contact the relevant CRA immediately - ideally with any evidence you may need to share with them.

Something as minor as an unpaid mobile bill from five years previous (which may not even be accurate) could be the difference between receiving a mortgage offer or being delicined.

3. Ensure you’re on the Electoral Roll

This is one of the simplest and quickest things you can do to improve your credit position.

Lenders want to know you are who you say you are and the CRAs want to be able to ‘pin’ your information to an address. Ensuring you’re on the Electoral Roll can also improve your credit score.

4. Be cautious applying for additional credit

When you apply for credit – anything from a mobile phone contract to a loan, a lender will typically search your credit report before making a decision. Often this will be a hard search (as opposed to a ‘soft search’, which means the search is recorded on your file.

Multiple applications for credit are frowned upon and are likely to have an impact on your ability to borrow. In the months leading to a mortgage application the general advice is to limit or avoid applying for credit elsewhere.

5. Close any unused accounts

If you’ve opened a number of accounts in the past that you’re no longer using, then there is no harm in closing some, or most of these down. If you close any unused bank accounts this can help improve your credit position.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.