Mortgages  

Prospective homeowners held back by poor credit scores

Prospective homeowners held back by poor credit scores

Poor credit scores are preventing prospective homeowners from getting mortgages, with many only discovering their bad credit at the point of application.

New research from specialist credit card provider Vanquis revealed one in four people aged 24 to 35 have been declined credit while more than half (53 per cent) of this group have never checked their credit score.

The figures are little better across all age groups, with one in five people having been declined credit and 43 per cent having never checked their score.

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One in ten of respondents said they only realised they had bad credit when they got turned down for a mortgage.

Sion O’Connor, marketing director at Vanquis, said: “The results of our research are really interesting. It’s so surprising that 43 per cent of adults confessed to having never checked their credit score, despite the fact that a credit rating dictates a large part of our lives.

“Building a good credit 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."

The study found evidence of a number of myths surrounding credit, with one in 10 people believing regularly checking your credit score would affect your rating.

A further 10 per cent believed your credit score will be better if you didn't borrow money.

Michelle Lawson, director at Lawson Financial, said: “I won’t assess any mortgage unless I have all the information up front. When I have got the whole thing in front of me, I know their commitments.

“People think they have all the information but all of a sudden commitments begin to creep in, so I do not look at an application until I have the relevant documents in front of me.

“I have been doing this for three years. It has made my time spent more efficient – I know where it is going and what the situation is. But speaking to people at industry events, there are so many who do not do this and I cannot understand why they don’t.

“In my experience it is the youngsters who have bad credit, because there is not enough education through the school system. There is nothing in the curriculum to do with financial and life skills.”

simon.allin@ft.com