Our Mini Guide To Understanding Credit Scores for Mortgages

If you’re thinking about buying a home - whether you’re a first-time buyer, moving somewhere bigger, or remortgaging - your credit score plays a bigger role than most people realise.

And here’s the thing: lenders don’t just look at a single “score.” They look at your behaviour. Every financial habit leaves a footprint. Some help you look like a dream borrower. Others… don’t.

So let’s break down, in plain English, what actually affects your credit score when it comes to mortgages in the UK - plus how things like Klarna, gambling apps, and payday loans really show up on your report. Because once you understand the rules, you can completely transform how lenders see you.

Our Mini Guide To Understanding Credit Scores for Mortgages

First: What Mortgage Lenders Are Really Looking For

Think of your credit history like your financial CV. It tells lenders three things:

1. Do you borrow responsibly?

2. Do you pay things back on time?

3. Are you showing signs of financial stress?

Your score is simply one part - they’ll also assess:

• Your income

• Your outgoings

• Your debt levels

• Your spending habits

• Your recent credit behaviour

• Whether you look stable and consistent

So no, it’s not just about a score out of 999. It’s about your patterns.

What Actually Affects Your Mortgage Credit Score (The Full List)

1. Late Payments: Even One Can Hurt

A single missed or late payment can dent your score for up to six years.

This includes:

• Credit cards

• Loans

• Phone contracts

• Car finance

• Buy Now, Pay Later providers

• Utility bills

Lenders see late payments as a sign you may struggle with the commitment of a mortgage.

Tip: If you think you’ll be late, contact the provider beforehand - some won’t report it.

2. Using Klarna, Clearpay & Buy Now Pay Later

BNPL apps do affect mortgages now - especially since 2023, when the main Credit Reference Agencies started reporting many of these transactions.

Here’s how Klarna and similar apps can impact you:

✔ Paying on time?

Usually fine. It can even help build credit history.

✘ Regular use?

This can worry lenders. It suggests you’re relying on micro-credit for everyday spending.

✘ Missed payments?

These will appear as arrears - and can significantly reduce your borrowing power.

✘ Using Klarna right before a mortgage application

Lenders can interpret this as financial pressure.

General rule: Light, occasional use isn’t a problem. Heavy, constant use is.

3. Payday Loans: A Big Red Flag

Let’s be honest: lenders really don’t like payday loans.

Even if:

• You only used one once

• It was years ago

• You paid it back instantly

Some mortgage providers will automatically decline applications if a payday loan shows up in the last 36 months.

Why? Because payday loans signal financial stress - even if you were just being cautious.

If this is on your file, a specialist adviser can help, but mainstream lenders may say no.

4. Gambling Transactions: Yes, They Absolutely Matter

Gambling apps do not appear as a separate category on your credit file.

BUT lenders can see gambling transactions through:

• Bank statements (usually 3–6 months)

• Transaction references (Bet365, SkyBet, etc.)

• Frequency of deposits and withdrawals

They’re assessing habit, not the act of gambling itself.

What concerns lenders:

• Regular deposits

• High-value spending

• Gambling while using an overdraft

• Gambling + credit card usage

• Using payday loans AND gambling (huge red flag)

What doesn’t usually concern lenders:

• Very occasional low-value bets

• One-off events (Grand National, World Cup, etc.)

If you gamble weekly or spend large amounts, it may reduce how much you can borrow - or even cause a decline.

5. High Credit Utilisation

This is how much of your available credit you’re using.

Example: If you have a £5,000 credit limit and usually sit at £4,000 used, that’s 80% utilisation, which signals risk.

Lenders prefer:

👉 Under 30% utilisation👉 Under 50% as a maximum

Consistently maxed-out credit cards are a red flag.

6. Lots of Recent Credit Applications

Every time you apply for:

• Store credit

• Phone upgrades

• Loans

• Credit cards

• BNPL apps

• Car finance

…a “hard search” may appear.

A single one is fine. Multiple in a short period looks like you’re desperate for credit.

Try not to apply for anything 3–6 months before your mortgage.

7. Not Being on the Electoral Roll

This is one of the quickest wins.

Being registered on the electoral roll helps lenders confirm your identity and stability.

Not being on it can:

• Lower your score

• Slow applications

• Trigger more manual checks

• Reduce confidence in your profile

It takes 2 minutes to sort and has a noticeable impact.

8. Having No Credit History at All

This is the most frustrating one.

If you’ve avoided credit your whole life, lenders often see you as more risky, not less.

Why? Because they can’t assess your behaviour.

Ways to build a positive history:

• Get a low-limit credit card and pay it in full each month

• Use BNPL occasionally (and responsibly)

• Keep a phone contract in your name

• Use a credit-builder product (e.g., the LOQBOX)

Consistency wins here.

9. Financial Associations (Old Partners, Ex-Housemates)

If you ever:

• Had a joint bank account

• Shared a loan

• Took out joint utilities

• Had joint car finance

• Lived together with a linked credit

…you may still be financially connected.

Their behaviour affects your credit score.

If you’re no longer connected?

Request a “financial disassociation” with the credit agencies. Most people have never heard of this, yet it can instantly improve your file.

10. Defaults, CCJs & IVAs

These are the “hard” marks on your file.

• Defaults stay for 6 years.

• CCJs stay for 6 years (even if paid).

• IVAs & Bankruptcy can severely restrict borrowing for years.

Mortgage options still exist, but usually at higher rates and often through specialist lenders.

Our Mini Guide To Understanding Credit Scores for Mortgages

So… What’s a Healthy Profile for a Mortgage?

Here’s what lenders love to see:

✔ On the electoral roll

✔ No missed payments in 3+ years

✔ No recent payday loans

✔ Buy Now Pay Later used lightly (or not at all)

✔ No gambling patterns

✔ Low credit card utilisation

✔ Only 1–2 hard searches in the last 6 months

✔ Stable income

✔ Consistent rent/mortgage payments

✔ No unexplained large deposits

✔ Clean bank statements

It’s all about predictability and stability.

How to Clean Up Your Credit Before a Mortgage Application

Do these 3–6 months before applying:

1. Stop using Klarna, Clearpay or BNPL unless essential.

2. Avoid applying for any new credit.

3. Reduce credit card balances to below 30%.

4. Stop gambling completely for 3 months (minimum).

5. Set up all bills on Direct Debit.

6. Get on the electoral roll.

7. Download your full credit report from Experian, Equifax and TransUnion.

8. Fix any errors or outdated information.

9. Avoid dipping into your overdraft.

10. Keep your bank statements “mortgage-friendly.”(Consistent spending, no big cash withdrawals, no erratic purchases.)

Final Thoughts: Your Credit Score Isn’t Everything, But Your Habits Are

The good news? Credit scores can be improved. Habits can be changed. And lenders look at the big picture, not one moment in time.

If you’re planning a mortgage soon:

• Start preparing early

• Clean up your financial footprint

• Avoid anything that signals stress

• Keep things simple and consistent

Download Our Mini Guide

Our Mini Guide To Understanding Credit Scores for Mortgages.

Download • 5.85MB

Your credit report tells a story. Make sure it makes lenders feel confident handing you the keys to your next home.

Want to get a head start on your mortgage plans? Why not book in for a free initial chat with one of our professional and fully independent mortgage advisors? Email us at info@brancasterhouse.co.uk or call our office on 01603 633344.