How to Improve Your Credit Score for a Bad Credit Mortgage - 8 Proven Steps
If you're planning to apply for a bad credit mortgage, improving your credit score beforehand can significantly increase your approval chances and help you secure better interest rates. While a bad credit mortgage broker like Sarah Tinkler can help you access specialist lenders even with poor credit, taking steps to improve your score first puts you in a stronger position. The good news is that even small improvements can make a real difference to lenders. Here are 8 proven steps to improve your credit score before applying for a bad credit mortgage.
1. Check Your Credit Report for Errors
Before you start working on improving your credit score, you need to understand exactly what you're dealing with. Obtain your free credit report from all three major credit reference agencies: Equifax, Experian, and TransUnion. It's important to check all three because lenders may use different agencies, and the information can vary between them. Carefully review each report for errors or inaccuracies. Common mistakes include accounts that don't belong to you, incorrect payment statuses, outdated information that should have been removed, or fraudulent activity. If you find errors, dispute them immediately with the credit reference agency. Correcting mistakes can quickly boost your score and improve your chances when applying for a bad credit mortgage. Even small errors like an incorrect address can cause problems, so check everything thoroughly.
2. Pay All Your Bills on Time - Every Time
Payment history is the single most important factor affecting your credit score, typically accounting for about 35% of your overall score. Late payments, even by just a few days, can significantly damage your credit rating and stay on your file for six years. Set up direct debits for all regular bills including credit cards, loans, utilities, phone contracts, and council tax. This ensures you never miss a payment due to forgetfulness. If you're struggling to make payments, contact your creditors immediately to arrange a payment plan - this is far better than simply missing payments. For anyone planning to apply for a bad credit mortgage, demonstrating at least 6-12 months of consistent on-time payments shows lenders you're now managing your finances responsibly, even if you had problems in the past.
3. Reduce Your Overall Debt and Credit Utilisation
High levels of debt negatively impact your credit score in two ways. First, it increases your debt-to-income ratio, which lenders assess when considering your bad credit mortgage application. Second, using a high percentage of your available credit (credit utilisation) suggests financial stress to lenders. Aim to reduce your credit utilisation to below 30% of your available credit limit, and ideally below 25%. For example, if you have a credit card with a £3,000 limit, try to keep your balance below £750-£900. Pay down existing debts systematically - focus on clearing the smallest debts first for quick wins, or tackle the highest interest debts to save money. Avoid taking on any new debt while you're preparing to apply for a bad credit mortgage. Every pound you reduce your debt by strengthens your application and demonstrates financial responsibility to mortgage lenders.
4. Avoid Multiple Credit Applications
Every time you apply for credit - whether it's a credit card, loan, phone contract, or car finance - the lender performs a "hard search" on your credit file. These searches are visible to other lenders and remain on your file for 12 months. Multiple applications in a short period make you appear desperate for credit, which raises red flags for mortgage lenders. If you're declined for credit, don't immediately apply elsewhere. Each rejection followed by another application compounds the problem and further damages your score. Instead, wait at least 3-6 months between applications. If you need to compare mortgage rates, use eligibility checkers that perform "soft searches" which don't affect your credit score. When you're ready to apply for a bad credit mortgage, work with a broker like Sarah who can identify the right lender first time, avoiding multiple applications that could harm your score further.
5. Register on the Electoral Roll
Registering to vote is one of the quickest and easiest ways to improve your credit score, yet many people overlook it. Being on the electoral roll helps lenders verify your identity and confirms your address, making you appear more stable and reliable. You can register online at gov.uk/register-to-vote and it takes less than five minutes. The impact on your credit score can be significant - some experts estimate it can add 50+ points to your score. Make sure your address on the electoral roll matches the address on all your credit accounts and the address you'll use when applying for your bad credit mortgage. If you've recently moved, update your electoral roll registration immediately, as address inconsistencies can cause lenders to decline applications even if your credit score is acceptable.
6. Keep Old Credit Accounts Open
Your credit history length matters - typically accounting for about 15% of your credit score. Older accounts demonstrate a longer track record of managing credit, which lenders view positively when assessing bad credit mortgage applications. Even if you've paid off a credit card and no longer use it, consider keeping the account open (unless it has an annual fee). Closing old accounts shortens your average credit history length and can actually harm your score. Additionally, closing accounts reduces your total available credit, which increases your credit utilisation ratio even if your debt stays the same. If you have old accounts you don't use, just make a small purchase every few months and pay it off immediately to keep them active. This strategy is particularly helpful if you have limited credit history or if your credit problems are relatively recent.
7. Consider a Credit Builder Card
If your credit score is particularly low or you have little credit history, a credit builder card can help demonstrate responsible borrowing. These cards are specifically designed for people with poor credit and have lower credit limits (typically £200-£500) with higher interest rates. The key is to use the card for small, regular purchases and pay off the full balance every month. This creates a positive payment history without costing you interest. For example, use it for your weekly grocery shop, then immediately pay it off. After 6-12 months of perfect payments, your credit score will improve noticeably. However, never use a credit builder card to accumulate debt - the high interest rates will cost you money and defeat the purpose. Many people working toward a bad credit mortgage find that 12 months of responsible credit builder card use, combined with other improvements, can move them from "high risk" to "acceptable risk" in lenders' eyes.
8. Separate Your Finances From Others With Bad Credit
If you have joint accounts or financial associations with someone who has poor credit, their credit history can affect your score and your bad credit mortgage application. This is called "financial association" and it happens when you hold joint credit accounts, joint bank accounts, or are named on joint bills. If you're no longer financially connected to someone (perhaps an ex-partner) but still have joint accounts showing on your credit file, consider closing these accounts and applying for a "notice of disassociation" with the credit reference agencies. This breaks the link between your credit files. However, only do this if you genuinely have no ongoing financial connection - you can't disassociate from a current partner with whom you share bills. For couples applying for a bad credit mortgage together where one partner has worse credit, the partner with better credit might need to be the primary applicant, though this depends on income and lender criteria. Discuss your specific situation with a bad credit mortgage broker like Sarah to find the best approach.
How Long Does It Take to Improve Your Credit Score?
Improving your credit score takes time - there are no instant fixes. Minor improvements can show within 1-3 months, but significant changes typically take 6-12 months of consistent positive financial behavior. If you have serious credit issues like CCJs, defaults, or missed payments, these remain on your file for six years, though their impact diminishes over time. The good news is that you don't need a perfect credit score to get a bad credit mortgage. Many specialist lenders will consider applications from borrowers actively working to improve their credit. A bad credit mortgage broker can assess whether you should apply now or wait a few more months while implementing these steps. Even if your score isn't perfect, demonstrating recent improvements and financial stability can make the difference between approval and rejection.
Please note that this blog post is for informational purposes only and should not be considered financial advice. For personalised advice, please consult a mortgage advisor.
Ready to Apply for a Bad Credit Mortgage?
If you've been working on improving your credit score and are ready to explore your mortgage options, our Bad credit expert services can help you find the right lender. Sarah Tinkler specialises in helping clients with adverse credit access specialist lenders, even while they're still improving their credit scores.
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YOUR HOME (OR PROPERTY) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.