Why moving home can reduce your credit score

Moving home can reduce your credit score

Lenders like you to stay put.

Why? Because it gives them reassurance that should you end up in arrears, they’ll be able to find you. It also makes it easier to negotiate a repayment arrangement, ensuring your loan gets repaid.

Some computerised lending systems automatically reject your application if you’ve moved home, for example, more than three times in the last two years.

As a result, people renting on short-term agreements, face a real challenge. Because of this, their credit scores tend to be lower.

Being on the electoral roll helps your credit score which goes up the longer you’ve been living at your current address.

Keep your file up to date

Lenders finding inconsistent address information on your credit file can cause you problems… for example

If you state you live at one address, but your credit report shows accounts in another location this can trigger fraud alerts.

Lenders may use software to search for inconsistencies between applications. So, if you say you moved out of a house in November in one application but said October on another – this could lead to you being turned down.

Another thing to remember is that if you use a postal forwarding service Credit Reference Agencies (CRAs) have access to this information as well. It helps therefore if they see post being forwarded from an old address to your declared current address.

If you do move, tell all of your account providers. This prevents inconsistencies in your credit report. It helps prove your identity when opening new accounts.

Never miss out an address when applying for a loan. Lenders use special search facilities to look for undeclared addresses. Consequently, you might be declined for a loan for not being open about your credit history.

Am I in a blacklisted area?

It’s illegal to ‘red line’ an area. This is where a creditor or insurer refuses to provide services because you live in a particular neighbourhood or postcode area.

Nevertheless, where you live can impact your score.

CRAs have information on defaults by region. As a result, a credit score may be reduced if you live in an area where default rates are high. You might be up to date, having never defaulted. Unfortunately you could end up paying the piece for your, neighbours missed payments.

This is why NestEgg provides lenders with an overview of your financial health, not just a credit score. It’s unfair that your score goes down because of where you live.

About Adrian Davies

With a background in money advice, Adrian's been campaigning for fairer finance for 25 years.

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