How does your credit history affect mortgage applications?
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Your credit history and mortgage application go hand-in-hand
When you’re applying for a mortgage, your credit history matters more than you might think. It’s one of the key factors that lenders use to approve your application, and it affects:
How much money you borrow
The interest rate on your mortgage, and the total you pay back
The variety and volume of deals available to you
Your credit history directly affects your next home.
When you have a healthy credit history, you’ll be offered more mortgages to choose between. And, even better, you’ll have access to rates that make your repayments cheaper too.
Why is my credit history important?
Your credit history is important because it shows mortgage lenders how well you’ve borrowed money in the past.
Every time you use Buy Now Pay Later (BNPL), it’s logged in your credit report. Your monthly PCP car repayments? Yep, that’s there too.
Credit reference agencies (CRAs) collect detailed information about how you manage credit. While it can feel a bit nosy, it actually helps lenders make fairer decisions based on how you’ve handled money over time.
Lenders use the information in your credit history to get a clear picture of how you manage money. It helps them to understand what you can realistically borrow and comfortably pay back, so you get the right mortgage that you can afford.
What shape is your credit history in now?
Do you know what your credit history looks like? If not, it’s free and easy to check your credit file as often as you’d like to. The sooner you do it, the sooner you’ll know where you stand before applying for a mortgage.
If there are any errors in your file with any of the CRAs, be sure to put them right as soon as you can so lenders get the right information about you.
Even if you’re not planning to apply for a mortgage for a while, the best time to get your credit history in shape and address any issues is always today.
What are mortgage lenders looking for?
They’re looking for signals that you will be able to repay a large sum of money over a fixed timeframe. That’s it.
The signals are:
How you’ve managed credit in the past
Whether you’ve paid on time
If you’ve missed any repayments, like defaults or county court judgments (CCJs)
How much money you’re borrowing right now
They’ll also want to know about your income and job stability, what you’re spending each month, how much of a deposit you have, and your credit habits, too.
And, there might be more left-field questions about your life, like:
Do you plan on having any children in the future?
What your bank transfer references mean (yes, they do check, so keep it sensible)
Don’t be surprised by what they might ask you and take every question as a good sign. The lender wants to know you can comfortably pay the mortgage, and that’s what you want too.
How far back do mortgage lenders look at your credit history?
Mortgage lenders typically look at the last six years of your credit history and this is how long any missed repayments stay on your record for.
Six years is a long enough time to analyse your credit habits and get a sense of your trustworthiness. If you’re worried about missed repayments from a long time ago, it might not be a big concern for lenders. Recent activity is usually more relevant than a mistake six years ago.
If you are consistent and reliable now, and you’ve built a strong track record over the last 12-24 months, it shows lenders you’re ready for a big financial commitment like getting a mortgage.
Lenders look at your history for merit and progress, and reasons to move your application forwards.
What if my credit score has dipped in the last six years?
If your credit score has dipped in the last six years, that’s okay. Try not to get hung up on it. Life doesn’t go in a straight line, and neither does your money. At some points in your life, your credit score will be higher than others.
It’s totally normal for it to go up and down by a few points, especially if you’re taking out new credit, even for small things like getting a new phone contract or opening a current account.
Feel reassured that the credit score is for you, not the lender. It’s like a cheat sheet, or a quick credit health check to glance at, and get a sense of where you are. Each CRA will give you a different number, too.
Lenders look at your full credit report and use their scoring system (each with their own criteria) to decide how much to lend you.
What if your credit history means mortgage rejection?
Sometimes your credit history gives clues to the lender that you’re not ready to borrow that sum of money yet and you get rejected for a mortgage. It’s frustrating, but it’s not the end.
In fact, it happens to so many of us – it’s even quite normal! 47% of successful homebuyers were rejected for a mortgage in principle at some point in their journey.*
While it’s disappointing, it’s also a chance to pause and improve your financial health before applying again. Hear us out.
When you borrow money, you want to feel confident you can pay it back, and that you were approved fairly. An unmanageable mortgage is pressure you don’t need.
Lenders also want to approve your application. They charge interest on their mortgages; it’s how they make money.
If they decide they can’t lend to you, it’s your sign to take a closer look at your credit report. See where improvements can be made and what you can do to strengthen your history for the future. We’ve got some practical tips below to help you improve your credit history.
Need to improve your credit history? No problem
There are a few things you can start doing right away to get your credit history looking as positive as possible before you apply for a mortgage:
1. Make a budget (and stick to it)
Potential mortgage advisers will take a close look at how you manage your finances, so put your best budgeting foot forward and try to save a little each month.
2. Repay everything on time
Whatever you do, try not to miss a bill payment. And, if you’re repaying a loan or credit card, paying off more than needed at a time always looks good to the CRAs (but don’t overstretch yourself to do it).
3. Stay generally credit fit
Basic essentials include registering to vote, staying within 25-30% of your credit limits, and trying to avoid other credit applications in the six months before applying for your mortgage.
4. Use a credit-improving service
There are special credit cards designed to help improve your credit history, and you can pay for other services that aim to boost your borrowing power.
Credit-builders like Loqbox prove your creditworthiness to lenders through several repayment tools that build your history steadily over time.
Are mortgages for ‘bad’ or no-credit history worthwhile?
They might be. Try not to rush into them. If your credit history is in a healthy position, you’re likely to get more choices, better deals and affordable rates.
A limited credit history gives lenders less information about you, or fewer signals of progress and stability. That means the mortgages on offer might be very expensive and tie you into a product that’s not the right fit for you.
Give yourself time to research and get support to understand how a bad or no-credit mortgage would work out in your life. Then look into building credit, and how simple it is to get started.
It’ll be worth the effort, we promise.
Top tips: Credit, mortgages and buying a home
Now you know how your credit history will influence your mortgage application. How satisfying! If you’re interested in polishing your credit report and making it as healthy as you can, we recommend reading:
If you’re ready to make a confident next step to home ownership, you’ll find inspiration here:
We want to leave you with one final thought, are you ready?
Healthy credit histories are made up of regular repayments.
Credit building is all about creating small, consistent habits, all leading to a positive credit history.
Every repayment you make is a step that takes you closer to the keys to your new home. And the best part? You can start those mortgage-ready habits right now.
*Loqbox first-time homebuyers survey, March 2025
Improvements to your score are not guaranteed.
Missing payments to Loqbox or other credit accounts may harm your score.
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