What is a credit score and how does it work?

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Your credit score is a three digit number and one of the things lenders look at when you apply for a mortgage. It’s a way of showing how reliable you’ve been with borrowing in the past.

Think of it as a snapshot of your financial behaviour. If you’ve made payments on time and kept your borrowing under control, your score is likely to be higher. If you’ve missed payments or had problems with debt, it might be lower. It could also be lower if you’ve not used any credit products in the past as you won’t have a history of repaying on time.

Different credit reference agencies (like Experian, Equifax and TransUnion) use slightly different scoring systems, so you won’t have just one credit score. Each agency will look at similar things like:

• Your payment history.
• How much credit you use compared to your limits.
• How long you’ve had credit accounts.
• Any missed or late payments.
• Public records like County Court Judgements (CCJs) or bankruptcies.

You can check your credit score for free, and it’s a good idea to do this before you apply for a mortgage. If your score is lower than you’d like, there might be things you can do to improve it, like paying off credit card balances or making sure you’re registered to vote.

While your credit score is important, it’s not the only thing lenders consider when they make a decision. Affordability is another key factor, so whether they think you can afford your mortgage repayments with your income and other regular expenditure you have.