Poor credit scores impact homeownership dreams | moneyfacts.co.uk

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Published: 28/02/2017

If you're dreaming of buying your home, building up your deposit fund will probably be high on the list of priorities – but what about building your credit score? This is where a lot of would-be homeowners fall down, with many failing to realise that a poor rating could deny them the home of their dreams.

Barrier to ownership

Research from specialist credit card provider Vanquis shows that many prospective buyers are struggling to get mortgages because of a poor credit score, but they're often only aware of their bad credit when they make their application. Indeed, their research shows that one in five respondents have been declined credit, with one in 10 of those being denied a mortgage – a figure which rises to one in four of the 24-35 age group – and a further one in 10 saying they only realised they had bad credit when they were turned down.

Much of this could be due to apathy when it comes to such things, with 53% of 24-35 year-olds admitting that they've never checked their credit score before, compared with the national average of 43%. It isn't just mortgages people are struggling with either, as of those who've been declined credit, 36% said it was for a store or credit card, while 23% were declined a personal loan.

This all suggests that awareness of the importance of credit scoring – and the need to get individual scores up to scratch – is clearly necessary, particularly for those hoping to take that first step on the ladder. However, it looks as though wider knowledge of credit scoring is also essential, with one in 10 respondents wrongly believing that regularly checking their score would impact their rating, and a further 10% believing (again incorrectly) that their score will be better if they don't borrow money.

Sion O'Connor, marketing director at
Vanquis, commented on the findings: "The results of our research are really interesting. It's surprising that 43% of adults confess to having never checked their credit score, despite the fact that a credit rating dictates a large part of our lives.

"Building a good rating is important to be able to borrow money for the important things we want in life, like a mortgage to buy a property of our own. It's concerning that so many people get to the point of applying for a mortgage before they even know there is a problem.

"We would advise people who have issues with their credit score not to apply for credit until they have improved their credit score, to get on the electoral register, make sure they pay their bills on time and, in the long term, consider using a credit builder card, [which can] help improve your creditworthiness by demonstrating that you can borrow money and meet the minimum payment each month."

What next?

Checking your credit score is always a good idea, and if you need to improve it, read our guide to get started

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