What Credit Score do you Need to Get a Mortgage?

There are a lot of myths around credit scores and their relationships to mortgages. While there are several credit checks during the application process, how your credit score affects your options will vary from one lender to another.

Here we explain how mortgage lenders view credit scores, whether there is a minimum score you need to get a mortgage, and what to do if your score is low.

What credit score do you need for a mortgage?

There is no minimum credit score you need to get approved for a mortgage as many lenders don’t use credit scoring at all. While mortgage applications always involve credit checks, this is often so the lender can identify risk factors such as bad credit. Many mortgage providers won’t focus on the scores you have been assigned by the credit reference agencies.

That said, having a ‘good’ credit score will increase the number of mortgage options available to you as there are lenders who do use credit scoring to assess mortgage eligibility.

However, what is classed as a ‘good’ credit can vary across credit reference agencies.

What do mortgage lenders class as a ‘good’ credit score?

Whether you have a ‘good’ credit score will depend on the credit reference agency in question. There are three main ones in the UK: Experian, Equifax and TransUnion and each has its own scoring system to determine how reliable a borrower you are.

• Experian: Assigns credit scores of between 0 and 999.

• Equifax: Assigns credit scores of between 0 and 1000.

• TransUnion: Assigns credit scores of between 0 and 710.

This table offers a breakdown of what is considered a strong credit score at each agency:

How mortgage lenders use this information

The main thing to remember is that not all mortgage lenders use credit scoring to assess eligibility, but the ones that do tend to have a credit reference agency of choice that they base their assessments on. Others, however, might use more than one and compare data.

This is because some credit agencies record and hold different information about individuals, and some update their records more frequently than others. It’s not unheard of for a borrower to be declined for a mortgage with one lender, only to be approved by another because the credit reference agency that provider uses holds different data on them.

Another vital point to keep in mind is that even the lenders that do use credit scoring don’t base their entire mortgage assessment on this factor alone. They will also consider:

• How much deposit you have

• The stability of your income

• Your age

• The type of property you’re buying

Many lenders, even those which use credit scoring, will be more concerned about the overall strength of your application based on all of these variables than your credit score alone.

How to check your credit score before a mortgage application

You can check your credit score by heading over to Checkmyfile and signing up for a free trial with them. This service draws information from the UK’s three main credit reference agencies: Experian, Equifax and TransUnion, to give you an overview of your scores.

The trial can be cancelled at any time and there is no obligation to proceed.

Once you have downloaded your files, be sure to study all of them closely to keep an eye out for errors. You can lodge a request with the credit reference agencies to have outdated or inaccurate information removed, and this can boost your credit situation.

You should also speak to a mortgage broker after you have downloaded your files as they can help you optimise them and recommend lenders based on your score.

Getting a mortgage with a low credit score

If you have checked your credit score and it falls within the ‘low’ parameters at one or more of the UK’s credit reference agencies, it is still absolutely possible to get a mortgage.

A mortgage provider might approve your application if any of the below applies:

• There is a legitimate reason your credit score is low (see the section below)

• The overall strength of your application is good

• You apply with a lender who does not use credit scoring

Borrowers with a low credit score are strongly advised to speak to a mortgage broker before they apply. They can explore whether there are mitigating circumstances that will work in your favour and ensure you are matched with the lender most likely to be flexible with you.

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Reasons why you might have a low credit score

There are several reasons why your credit score might be low, and some mortgage lenders might consider these legitimate and offer you a favourable deal. They include:

1. Bad credit

This includes everything from missing payments on a credit agreement to declaring bankruptcy. Having bad credit of any kind can make it more difficult to get a mortgage, but there could be options for you to explore with your mortgage broker, depending on the age, severity and reason for the credit issues you have against your name.

2. Limited or no credit history

There are many reasons why somebody might have little-to-no credit history in their files. Perhaps they haven’t been residing in the UK for very long, are a first-time buyer who has previously only lived with their parents, or have had to move home regularly.

Some mortgage providers will consider these to be acceptable reasons for a low credit score and may lend with no strict caveats. There are also ways to build up some credit history very quickly, including joining the electoral register and ensuring all bills are in your name.

3. Opening accounts or applying for credit too often

Opening a new bank account can lower your credit score temporarily. It will recover with sound financial conduct going forward, but if you open too many accounts in a short space of time, it may not get the chance to normalise ahead of your mortgage application.

Similarly, applying for too many credit agreements (including mortgages) within a small window can impact your credit score as it suggests you might be borrowing irresponsibly.

Which mortgage lenders don’t use credit scoring?

Some lenders use a specific credit reference agency to help them determine a mortgage applicant’s creditworthiness while others use multiple. For example, HSBC and Skipton Building Society use Experian, while Nationwide compares scores across three agencies.

Mortgage lenders who don’t use credit scoring tend to take a holistic approach to mortgage eligibility and assess applications on their overall strength. These lenders include:

• Pepper Money

• Bluestone

• Kensington Mortgages

• Scottish Building Society

• Furness Building Society

• Vida Homeloans

Lenders who don’t credit score are a potential solution for borrowers with bad credit or low credit scores, but keep in mind that you could still be approved by a lender who does credit score if your application is otherwise strong or there is a legitimate reason for your low score.

Tips to help you improve your credit score

Although there are lenders who don’t take credit scores into account, having a good one can still improve your chances of securing a favourable mortgage deal.

Here are some tips to help you build credit quickly and improve your score:

1. Pay all bills in full and on time: Including loans, credit cards, and other accounts. This will show lenders that you're a reliable borrower and manage the debt you owe.

2. Don't apply for too much credit at once: This can indicate you are struggling to make ends meet with your current income and expenses. A good credit score means balancing your credit mix and making sure your credit card balances are within limits.

3. Reduce debt where possible: A good credit score isn't just based on what you owe; it also includes how much debt you have compared to your income and available credit, so consider clearing debt you’re in a position to pay off before applying for a mortgage.

4. Check your credit history: Regularly checking your credit history is very important if you want to make sure it's up-to-date and accurate. Make sure you challenge any inaccuracies with the relevant credit reference agency and request the removal of outdated information.

5. Use credit cards responsibly: It would help if you aimed to use credit responsibly and make repayments in full each month. Credit scores are calculated on, among other things, the amount of credit you have compared to how much you use. Getting a limited credit card can help you build up some credit history, as long as you use it within your means.

6. Get on the electoral roll: Finally, it's worth remembering that registering to vote at your current address will improve your credit score in the eyes of lenders. You can find out how to join the electoral register by visiting the UK Government’s official website.

Why choose Teito for your mortgage needs?

Whether your credit score is high or low, the best way to boost your chances of landing the most favourable mortgage deal possible is speaking to a broker before you apply.

Our brokers have expert knowledge and access to the entire market, which makes them ideally placed to pair you with the mortgage lender who’s the best fit for your credit profile.

Here are just some of the reasons our customers choose us for their mortgage needs:

• Our brokers specialise in borrowers with credit problems

• Your first consultation is free with no obligation to proceed

• We are 5-star rated on leading review websites

• You can apply for an agreement in principle through us in minutes

Ready to take advantage of a free, no-obligation chat with a whole-of-market mortgage broker and explore what options are available to you? Get started here.