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Poor credit scores continue to hamper prospective homebuyers

A new survey looking into the nation's understanding of finances has suggested that prospective buyers are struggling to get mortgages due to poor credit scores - with many only realising their credit rating was low at the point their application was rejected.

The research, commissioned by specialist credit card provider Vanquis, set out to gauge public understanding of what credit is, how credit has affected their lives and if people know how to improve their credit scores.

The data revealed that one in five people in the UK have been declined credit, with one in ten of this group being denied a mortgage, rising to one in four for the 24 to 35 year old age group.

Over half (53%) of 25 to 34 year olds confessed that they have never checked their credit score before, compared to the national average of 43%.

Of those who had been denied credit, 36% said that they had been rejected for a credit or store card and 23% when they tried taking out a personal loan. One in ten of respondents said they only realised they had bad credit when they got turned down for a mortgage.

In London, 16% of those who were turned down for credit were denied a mortgage, with one in five only learning they had bad credit during their application.

When asked a series of true or false questions relating to credit, one in ten people believe that regularly checking your credit score will affect your rating and a further 10% believe that your credit score will be better if you don’t borrow money, both of which are incorrect.

Sion O’Connor, Marketing Director at Vanquis, said: “The results of our research are really interesting. It’s so surprising that 43% 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.

We would advise people who have issues with their credit score not to apply for credit until they have improved their credit score, to get on the electoral register, make sure they pay your bills on time and, in the long term, consider using a credit builder card.

A credit builder card helps improve your creditworthiness by demonstrating that you can borrow money and meet the minimum payment each month.”

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