36% of adults are ignorant of their credit score. Shocking.

According to HSBC, 36% of adults are unaware of their credit score. That’s according to their survey of 2,000 people, as reported by Mortgage Solutions.

In truth, we had an inkling of how serious the problem was before HSBC published their report. Based on our experience, 90% of our customers haven’t downloaded their credit report when they enquire about a mortgage.

That’s a lot of (potential) homeowners leaving themselves vulnerable to rejection. And one thing you don’t want is a lender to only offer you a mortgage using bad-credit lending criteria. The more rejections you collect, the more likely lenders are to reject you.

So, in today’s post, we’ll look at the key findings of HSBC’s survey. But we’ll also give you some practical advice on:

• Why your credit score matters, and
• Practical steps you can take to improve it

The HSBC report reveals more damning figures

There is a real disconnect between certain age groups and their financial well-being. But there are some scary results across the group as a whole. Here’s a rundown of the highlighted statistics:

Across the group

Here are the eye-opening figures from respondents across the survey as a whole:

• 43%: how many have been inactive in the last year, doing nothing to maintain or improve their score
• 36%: how many didn’t know what their credit score currently was
• 33%: only a third recognised that making payments on time helped improve their score
• 29%: how many never check their credit score
• 26%: how many were unaware of how credit reference agencies (CRAs) calculate their score
• 22%: how many are wholly ignorant of factors that make up a good score
• 8%: those unsure if they even have a credit score

Thankfully, there was a glimmer of hope. 56% of respondents recognised that a missed credit card payment is a key negative factor. And 48% said that they knew their current credit score.

Thank the Lord for small mercies.

By specific age groups

The two headline stats by specific age groups are a tale of two generations:

• 63%: respondents aged 55+ who’ve taken no action to improve/maintain their score in the past year
• 60%: millennials who are concerned about their current credit score

You may scoff. But this stuff matters if you want a mortgage, loan, credit card, or overdraft. Here’s some practical advice you can take if you recognise yourself as falling into any of those brackets.

What is a good score?

The three main Credit Reference Agencies each use a different score. Experian and TransUnion have three tiers: Excellent, Good and Poor. Equifax has those, but also a ‘Very Good’ category.

Your tier will dictate both the credit you’re approved for and the interest rate you’re likely to pay. Having a Good or Excellent score can save you thousands of pounds, especially over the term of a mortgage.

To get a visual on what all three agencies hold on file for you, why not use CheckMyFile? Their report is free for the first month, then £14.99/month thereafter. It consolidates all three of the above CRAs’ reports into a single document. It doesn’t half make life easier.

Build a better credit score

Here’s a brief overview of steps you can take to build a better credit score:

Download your credit report

This is the first and most important step. Creditors are not infallible. There may be erroneous items in your report that you think long resolved, but which are affecting your score. If you don’t know that they’re there, you can’t challenge them.

Check your Electoral Roll registration

Being on the Electoral Roll verifies your address to creditors. You should always check your credit report to ensure the addresses match. If you’re still registered at a previous address and that household has incurred any form of bad credit, it will affect your score.

Do you really need that brand-new smartphone now?

If you’re hoping to buy a home or remortgage, that mortgage should be your priority. Ask yourself if applying for credit for a new Smartphone contract, TV, or car can’t wait until after you secure your mortgage.

Keep credit applications to a minimum

Also, if you’ve applied for a mortgage and been rejected, hold fire. Don’t automatically apply for another without finding out what tripped you up and taking action to fix it. Multiple applications suggest to creditors that you’re already straining your finances.

Pay your bills on time, every time

Almost all bills are paid online or via direct debit today. Everything from your TV license to your Council Tax payments are conducted digitally. Make sure you pay those bills on time. Your lender will assume that if you can’t meet a Council Tax bill, you won’t be able to meet mortgage repayments.

Build up your credit history if you have none

One reason for rejection, especially for first-time buyers, is a lack of sufficient credit history. You can start by taking out a low-limit credit card or a small personal loan. Paying these consistently and in full will begin to build up a positive digital picture of your financial well-being.

Our full credit report guide for mortgage applicants

Understanding your credit score and history is fundamental to you securing the most competitive mortgage deal. And, once you’re on the right path, building and maintaining good credit thereafter needn’t be complicated.

So saying, you have to know what actions will build a positive score to begin with. We hope this post has pointed you in the right direction.

But the factors we’ve outlined above are just the basics. We go into much more detail in our guide, Why mortgage applicants should get a copy of their credit report. You can thank us later. Good luck!