Mapped: Average Credit Scores in the UK
What is a good credit score and where do some of the country’s highest scorers live? We combined data from two of the UK’s biggest agencies to find out.
The good news is that UK credit scores have risen by one point and remained stable, putting consumers in good stead for the rest of 2020.
A high credit score can open doors to more extensive services, better interest rates and higher credit limits, while a low one can limit access to credit entirely. If you’re looking to step onto the property ladder, a higher rating can improve your profile in the eyes of lenders, but your credit score is just one of many variables that come into play when applying for a mortgage.
To find out where some of the highest scorers in the UK live, we combined data from two of the biggest credit agencies in the UK and developed a unique credit score index for 30 counties. All scores are out of a possible 1699 and well above the national average of 570.
Oxfordshire and Surrey Boast the Highest Credit Scores in the Country
Top Ten: Best Credit Scores in the Country
|Highest Credit Score Areas||Total Score out of a possible 1699|
Oxfordshire has the highest average credit score in the country, over two and a half times the national average of 570 and 154 points higher than the area with the lowest credit scores in the UK, Nottinghamshire.
“Many people have been asking us what constitutes a good credit score when trying to buy a home. The topic is more relevant than ever right now as we navigate our way through the uncertainty of the last few months, but with so many variables, and credit score companies all calculating scores differently, it’s not an easy question to answer.
We have combined data from two of the biggest agencies for our credit score review, and while it’s interesting to see the variation in numbers, an average credit score is just one of several factors that play a part in your ability to get a mortgage. Therefore, even if your credit score is not where you want it to be, this shouldn’t be a deterrent in your search for a home”. – Nick Lieb, Head of Operations at Share to Buy
How has COVID-19 Impacted Credit Scores?
The last few months have been some of the most challenging and uncertain for people across the UK.
According to Google search data, interest around loans peaked between March and June 2020, with the phrase ‘can I get a loan’ rising by 11% compared to the same period last year, while the phrase ‘how to improve credit score’ went up by almost 27% since 2019.
What Affects Credit Score Positively?
Wondering how to improve your credit score? Several factors can positively impact credit scores throughout our lives. Registering to vote is an excellent place to start, as most credit scoring companies use the electoral roll to help confirm your identity and address. Three key ways to impact your score positively include:
- Set up direct debits where possible: Consistent, regular payments look good on your profile, so try to set up direct debits for as many payments as you can to ensure you pay on time and in full regularly.
- Maintain older accounts: The average age of your bank account is taken into consideration by credit scorers, so try to stick to one account that can be well managed over the long-term.
- Don’t borrow more than you can afford: Always ensure you can meet minimum repayments easily, and pay off accounts sooner if you can. This shows you can manage within your set limits.
It’s also worth noting that new trends, such as buy now, pay later schemes like Klarna, won’t harm credit scores unless payments are missed. These schemes typically perform a ‘soft search’ on your credit history, which means that no matter how many of these have been carried out, companies won’t be able to see them. This is opposed to the ‘hard’ checks performed when applying for a mortgage or a credit card, as these are always noted on your record.
What Impacts a Credit Score Negatively?
Credit scorers look for certain red flags when assessing your eligibility. Here are a few things you should try to avoid:
- Missing payments: If this happens regularly, you could have a potential default flagged on your profile which can stick around for up to six years.
- Lending beyond your means: Borrowing more than you can afford means sticking with repayments is tricky, and when debt piles up, it can quickly become unmanageable. If you get a debt relief order or apply for bankruptcy, your credit score will be significantly impacted.
- Regularly applying for credit: Each time you apply for credit, lenders perform a ‘hard’ search on your credit history which is logged on your profile. If too many of these are logged, it could potentially become a red flag.
Buying a Home through Shared Ownership or Help to Buy
For buyers who can’t quite afford to purchase a home on the open market, Shared Ownership offers an alternative route onto the property ladder. The scheme allows purchasers to buy a share of a new build or resale home, usually between 25-75%, paying a mortgage on the share they own and a below-market-value rent on the remainder.
Alternatively, Help to Buy provides eligible buyers with an equity loan (also known as shared equity) of up to 20% of the value of a new build home (or 40% if buying a home in London). The government provides the loan, so the buyer only needs to raise a 5% deposit, with a 75% mortgage (or 55% in London) to make up the rest.
Credit Score FAQs: Buying a House through Shared Ownership or Help to Buy
Q: What is considered a good credit score when trying to buy a home?
A: This isn’t an easy question to answer as there are many variables that play a part, plus different credit score companies all calculate scores differently. However, lenders don’t just take that figure into consideration; they look at several factors when scoring you, one of which is your credit score value. Therefore, even if your credit score isn’t quite where you’d like it to be, this shouldn’t be a deterrent.
Q: I can afford the home but have a poor credit history because of a past instance. Can I still buy?
A: To be eligible to buy a home, you need to be able to take out a mortgage. If your credit history stops you from doing this, then you would not be able to proceed. Before renting a property, housing associations also run a credit check. In some cases, they won’t allow you to rent the property if you have bad credit, so it is worth asking them about their policy even before you view the property. Try our mortgage calculator to get an idea of affordability.
Q: I have loans, a credit card and overdraft. Will I still be eligible for Shared Ownership or Help to Buy?
A: This depends on the size of the loans and credit cards as they are taken into consideration when working out affordability, although it will not completely rule you out. For further information, we recommend speaking with a financial adviser to discuss the options available to you.
Q: I’ve been assessed and approved for a Shared Ownership home but I am being asked for a 10% deposit, rather than the 5% I was expecting. Why is this the case?
A: This depends on your individual circumstances – for example, if you’re in temporary work, have visa restrictions, have a lot of financial commitments or have a poor credit history. If you’re looking to buy a home, we suggest speaking with an independent mortgage adviser who can recommend the best mortgage rates and options to suit your budget.
Q: Are there any examples of why a lender would reject a mortgage application?
A: Various criteria are taken into consideration when applying for a mortgage – in turn, there’s a number of reasons why you might be rejected. It is your mortgage adviser’s job to look into your situation in enough detail to ensure that they place you with a lender who will accept your application. Any unusual factors in your situation most likely reduces the number of lenders that would accept your application, which may mean that you don’t have access to the very best rates available, but your adviser will let you know if this is the case. However, no matter how well the adviser has done their job, the most common stage that a lender will decline is once the credit score check has been completed.