Why a Bad Credit Score Will Not Affect Your Address
Updated: November 17, 2023 Author: Paul Gillooly
Quick answer: A bad credit score will not affect your address. Your credit score belongs to you as an individual and won’t affect anyone else living at your address or moving to your address after you. If you have a bad credit score and have a joint bank account or joint creit with someone at your address, this could affect their credit score.
Living with a low credit score is stressful. It leaves you with many questions about how your credit rating will affect you, your home, and the people you live with. And the situation is made even more challenging by the significant amount of misinformation to sort through.
We’ve packed this article with all the facts you need to understand how a bad credit rating will affect your living situation. We’ll explain what your credit score means for the people you live with, what happens when you move house, and whether where you live affects your credit rating.
What is bad credit?
Bad credit is a casual way to describe a low credit score. Your credit score is decided by credit reference agencies and given to you in a credit report.
Credit reference agencies determine your credit score by analysing your past financial activity, such as whether you managed to repay previous loans on time. They store your financial history and send the information to loan companies to help them decide whether to lend you money. The three leading agencies in the UK are Equifax, Experian, and TransUnion.
Your credit score gives you a rough idea of how likely lenders are to provide you with a loan. Each agency has a unique way of analysing financial behaviours, but generally, you’ll end up in a similar category with all of them. Lenders often also assess you based on their own criteria, which means that you might have your loan rejected by one lender and accepted by another.
Check out our helpful guide to learn more about what causes a bad credit score, how it’s calculated, and how to improve it.
How does your address affect your credit report?
You’ll need a permanent address for your credit report and credit applications. Loan companies use this information to help confirm your identity.
Your address can only impact your credit applications if the details on your credit report and loan application don’t match. Sending off an application with a different address or error may cause the lender to reject your application immediately. That’s why it’s essential to make sure your details are up-to-date on your credit report before applying for a loan.
Credit reference agencies often take your details from the electoral register, so it’s important to keep it updated. You can edit the details on your credit report by contacting the credit reference agency before sending an application if you realise there’s still a previous address or an error.
What happens to your address if you have bad credit?
Many people worry that their credit score will negatively impact their address and those living there. However, if you don’t share a financial account, it’s unlikely that your credit will affect the people who live at your property.
Can your address be blacklisted?
People often say that bad credit can cause your address to be blacklisted. However, this is false. Your credit score is an assessment of how you handle money, not your address, property, tenants, or housemates. It can only affect the people you live with if you have a financial association.
Financial associations are based on your accounts, not your relationships. Being married to someone isn’t a financial association unless you share an account. However, linking your address with your spouse may cause creditors to consider both of your financial histories when you apply for a loan.
You’re considered to have a financial association with someone if you currently share an account with them or have done so in the past. Any type of joint account that deals with bills or banking can link you with someone financially, including joint bank accounts and joint utility payments. Both people should declare every association on their credit reports.
When somebody is applying for credit, the lender may consider the financial situation of people they are financially associated with if the connection is deemed significant enough. Lenders may be less likely to accept an application for credit if they decide that the associated person has a bad credit history.
If you held a joint account with someone but have closed it, both people should report the changes to credit reference agencies to remove the financial associations. These agencies will contact the companies you had accounts with to confirm that there is no longer a link between you and the other person. They will remove the financial association from your credit report when they are satisfied that you are no longer associated with the other person. Once the association is removed, the other person’s credit report will no longer be affected.
Remember that the end of a relationship doesn’t necessarily mean the end of an account or association. Check that you have separated your financial association on all accounts before informing the credit reference agencies.
Does your bad credit affect your address after you leave?
Your credit score is yours alone. No matter how low your rating, it won’t affect the people who move to your address after you. Even if a relative or friend were to move into the property after you left, it wouldn’t affect their credit score unless you have a financial association.
Will your address affect your credit score?
A credit reference agency won’t consider the neighbourhood you live in, your postcode, or the credit scores of previous tenants at your address when giving you a credit score. The only situation that may affect your credit score is if you live with someone and share bills or a joint account.
Does moving property affect your credit score?
In general, moving home and the area you move to won’t affect your credit score. However, moving a lot in a short space of time can make you seem unpredictable to credit reference agencies and lenders. They may assume you are unsettled because you struggled to pay the rent.
How does bad credit affect moving house or flat?
A poor credit score can make it harder to find a new home, whether you’re renting or buying. Estate agents, mortgage companies, and landlords can be less likely to accept applicants with poor credit scores.
How does bad credit affect your ability to rent?
Estate agents and landlords often ask to complete credit checks before accepting new tenants. Their goal is to make sure that tenants will be able to pay their rent on time for the whole contract.
If your credit score is low, estate agents may reject your application. In cases where they do accept your application, they may ask for the following:
- A large deposit: Landlords may ask for a bigger security deposit to cover the rent in case you fail to pay.
- Guarantors: Landlords may ask a guarantor to sign your lease to make sure someone can pay if you can’t. A guarantor is a person who is responsible for paying your rent if you are unable to. Guarantors will need to have a better credit history than yours.
If you’re struggling to find a landlord or estate agent who accepts your bad credit score, it may help to offer to pay for a few months of rent upfront. If you can’t prepay some rent, speaking to landlords directly might work better than going through estate agencies. Individual landlords may ask for proof of your current financial situation or renting history instead of completing a credit check.
How does bad credit affect your ability to buy a property?
Buying a house is a big financial undertaking, so mortgage lenders will always complete credit checks. However, specific mortgages are available for people with bad credit scores.
Bad credit mortgages aren’t very different from other mortgages, except that they tend to have higher interest rates. They might also restrict the amount you can borrow or ask for a larger deposit towards the property. As a result, mortgages are usually more expensive for people with low credit.
How does bad credit affect a joint mortgage?
You may have chosen to apply for a mortgage with another person. If that’s the case, lenders will consider both creditors’ scores when deciding whether or not to accept your application. Applying for a mortgage with someone who has a good credit score might mean that you can get a bigger mortgage or better value.
If you bought a house with someone else, your credit score will affect them because you are financially associated.
How to get a loan for home improvements when you have bad credit
Moving is a complicated process. But there are added challenges after you move in. It’s often difficult to find a good loan to complete home improvements when you have bad credit. However, some lenders are more likely to accept applications with poor credit scores than others.
We have a selection of lenders who accept applicants with bad credit. We compare over 30 lenders to give you the best quote for a home improvement loan.
Paying utility bills with bad credit
Finding good deals on utility bills can be tough with lower credit scores. Here’s a breakdown of how bad credit affects your main utility bills:
- Water: You don’t have the ability to choose your water provider, so they can’t reject you because of your credit scores. And water suppliers can’t cut off your supply if you fail to pay them.
- Gas and Electricity: Gas and energy suppliers are less strict than mortgage or loan companies. But they will want to be certain that you can pay your bills and the debts you currently owe. To do that, they will carry out a credit check if you’re applying for a postpaid tariff. If a supplier rejects your application, you may be able to pay deposits towards a post-pay tariff or choose a prepayment metre.
- Broadband: You can apply for broadband that doesn’t do a credit check. However, the broadband available will differ depending on where you live.
- Council Tax: Councils won’t conduct a credit check when you move home. And how you pay your council tax bills won’t affect your credit report because it is dealt with as in a magistrates court.
Failing to pay your utility bills on time can harm your credit scores, so be sure to check if you are eligible for help paying your bills.
What happens if your credit score drops while you are already living at a property?
Your credit score may drop slightly when you first get a mortgage. That’s because it’s a hefty loan. But your score will go back up once you’ve proven that you can pay the mortgage back.
If your credit score drops because of other financial difficulties while you already have a rental contract or mortgage, it may affect your future applications. These changes will affect you differently depending on whether you are renting or have a mortgage:
- Renting: Landlords and estate agents may not complete a credit check when your contract needs to be renewed if you have built up a good relationship and consistently paid your bills. If they decide to, they will have to ask your permission first.
- Mortgage: Choosing to change your provider or the amount you repay each month may lead to you receiving another credit check. Drops in your credit rating may affect the types of loans and interest rates you have available. Mortgage providers will also consider how well you’ve managed your mortgage payments so far.
Overall, you’ll probably have some changes if you apply for a mortgage with different terms. But you may not have another credit check if you stay in the same property, making the same payments for rent or mortgage.
Understanding your credit score is the first step towards improving your situation. A bad credit score can make it harder to buy and rent a property, but it won’t cause future tenants or your current flatmates to be blacklisted.
If you’re planning to move in the near future, it’s more important to choose a mortgage or rental contract that you can repay reliably than picking an address with a good postcode because where you live won’t affect your credit rating. Deciding which loan company to apply to can be stressful because rejected applications can harm your credit score. We’re a broker that searches through over 70 lenders to find out which ones are most likely to give you a loan. And you don’t have to pay us.