Credit scores can be confusing. The score that is used by lenders to determine your eligibility for a mortgage is usually less than clear. So let us clear it up for you.
Mortgage lenders use three different agencies when checking the credit score of applicants - Experian, Equifax and Callcredit - and each agency scores you differently.
What is classed as a good credit score?
Not only do lenders use one or more of the three different agencies, each of the credit agencies score you differently. Experian scores out of 999, Equifax out of 700 and Callcredit 710.
With Experian, a score of 700 or above is considered good, while a score of 800 or above is considered excellent.
With Equifax, a score of 475 or above is considered excellent.
Callcredit provide a score out of 5 for your overall credit rating, based on your score out of 710. Five is the highest and the score at which you will most likely be accepted by lenders, three is average and one is the worst rating which will find you struggling to be accepted.
So what might be enough to get you a good score with one agency may not be enough for another.
What if I have a bad credit score?
If you have a bad credit score, you’re less likely to be accepted for a mortgage.
However, don’t assume you will be rejected. There are plenty of factors lenders take into consideration, such as your affordability and your income.
Lenders will even consider your application if you are an existing customer with a good record with them. And, of course, a good sized deposit of at least 10% will stand you in good stead.
If you have had bad credit problems, there are lenders who specialise in bad credit mortgages, and our expert advisers are able to advise on these lenders and mortgages.
If you would like to discuss credit ratings further, do not hesitate to get in touch with one of our expert advisers, either via live chat on the website, over the phone or in-branch.