As a growing number of Britons say their credit score has worsened since the pandemic, new research by The Mortgage Lender has revealed that poor credit scores have deterred one in 10 from applying for a mortgage.
The research also suggested evidence of a limited understanding of credit scores among the population, with 62% of the 2,000 UK adults surveyed admitting that they did not know their credit score. 50% of those who plan to buy a property in the next year were 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. 60% of respondents said they had never taken steps to improve their credit rating, while a further 13% said they weren’t clear on what steps they should be taking to improve their credit situation.
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 adds: “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.”