Credit Score Basics > Does your address affect your credit score?

Does your address affect your credit score?

Wollit Team4 minute read · Updated 30th June 2024

In the UK, your address does not directly affect your credit score.

Your address is mainly used to confirm your identity and is not a factor in calculating your credit score. Credit agencies instead look at how you handle credit, payment history, and credit applications to calculate your credit score.

That being said, there are times when your address matters for your credit score. Let’s take a closer look at how your address is used and the various ways it can indirectly influence your creditworthiness.

Can my address boost my credit score?

Your address alone doesn’t affect your credit score. But registering to vote and updating that registration every time you move home can make a difference.

According to Experian, getting on the electoral roll can add up to 50 points to your credit score (out of 999). That’s pretty good, considering that registering to vote takes five minutes and is free.

This is a bonus that credit reference agencies give to encourage you to keep your address records up to date. This helps them verify your identity. Credit agencies need to confirm that you are who you say you are, and your address is one of the critical pieces of information they use for this. When you apply for credit, such as a loan or credit card, the lender will check your address against the Electoral Register to ensure it matches the information you gave them.

This verification process helps prevent fraud and tells them the credit report they are accessing belongs to you. If there are any discrepancies between the address you gave and the address on file, it could raise red flags and potentially delay or complicate the whole credit application process.

At the same time, if credit reference agencies notice unusual activity, such as credit applications or accounts being opened at an address other than your usual residence, it could be a sign that someone is trying to use your identity illegally.

Can my address hurt my credit score?

Where you live doesn’t directly impact your credit score, but this doesn’t mean that it can’t indirectly influence how lenders perceive you. Lenders will often include factors such as the average income, employment rates, and crime levels in your area when evaluating credit applications, especially for large unsecured loans or mortgages.

For example, let’s say you live in a high-crime area or a neighbourhood with a lower average income. In that case, lenders may view you as a higher-risk borrower, even if your financial situation is strong. This perception could lead to less favourable credit terms, higher interest rates, or even an application being refused.

Lenders may also use your address to send specific offers through ads or emails. Often, these marketing campaigns are based on their information about your local area.

However, you should remember that lenders are legally not allowed to discriminate based solely on your address or the area you live in. If you suspect you’ve been discriminated against, report the lender and complain to the Financial Ombudsman.

Does renting or owning a property make a difference to my credit score?

While your credit report doesn’t list if you are a homeowner, landlord, or tenant, renting and owning a property can affect your credit score.

Here is how renting can impact your credit:

When you apply to rent a property, the landlord may perform a credit check, which can result in a hard check on your credit report. Too many hard checks in a short time can lower your credit score.
Paying rent on time and in full can help establish a positive payment history, which may benefit your credit score, especially if you report this information to the credit reference agencies (for example, by using Wollit).
Of course, if you report your rent and miss your rent payments or even get evicted, this will also be reflected in your credit report. The key is to report your rent and make your rental payments on time. This will show lenders that you’re financially responsible.

Owning a property can also impact your credit score:

Applying for a mortgage to purchase a home always requires a thorough credit check, which will result in a hard inquiry on your credit report and temporarily lower your credit score.
However, once you become a homeowner, paying your mortgage bill on time can help build your credit history and improve your credit score.
If you don’t have a mortgage but own your property outright, this won’t impact your credit score. However, it can open the door to getting secured loans if you have bad credit but need a loan.

Can moving home often affect my credit score?

Moving home often doesn’t directly affect your credit score, but it can have a significant indirect impact:

First of all, if your lenders or credit card issuers don’t have your current address, they may send important documents, such as billing statements, to the wrong location, leading to missed or late payments, which can affect your credit score.
Second, you might forget to update your electoral roll registration. This can lower your credit score by a few points, but the worst part is that it can make it much harder to verify your identity. You might be refused loans if this happens, and you might even find it difficult to access your own credit report.
Third, moving home often can make lenders wonder why you’re doing it. Did you find it hard to meet rent payments?

How can I make sure my address improves my credit score?

While your address does not directly affect your credit score in the UK, it plays an essential role in the lending process. Your address is used to verify your identity, spot fraud, and assess risk, all of which can influence lenders’ decisions.

To make sure your address has a positive impact on your credit score, here is what you need to do:

Register to vote and update your registration whenever you change home.
If you’re on a mortgage, pay all bills on time.
If you’re a tenant, consider downloading a credit-building app.

One such app is Wollit. Wollit is an app that reports your rent payments to Experian (the UK’s largest credit reference agency). This helps you add your rental history to your Experian credit report, showing lenders that you’re financially responsible and pay your bills on time.

Besides this, Wollit also reports your monthly fixed-fee subscription as a loan repayment to all three credit reference agencies. However, unlike your address, this loan repayment does actually directly influence and can improve your credit score.