Is there a minimum credit score for a mortgage?
One of the most common mortgage myths we hear is that there is a minimum credit score needed to get a mortgage. Put simply - that isn’t true.
Your credit score can certainly impact your choice of lenders as banks use it to get a better understanding of your financial history and the likelihood of your defaulting on your loan.
Usually a higher score suggests that you're more likely to be a responsible borrower and make your payments on time and in full.
However, every lender has different rules which affect what they define as a low credit score or bad credit and other factors such as your income and age can affect a lender’s decision too.
What are credit reference agencies do lenders look at?
UK mortgage lenders tend to use three credit reference agencies ; Experian, Equifax and TransUnion, although there are many others that are referred to by lenders across the UK.
If you’ve ever checked your credit score before, you may already know that each of these agencies and the many others that provide information about your credit history, use different scoring systems.
This can be frustrating because one lender may refer to Experian and use their scoring system whereas another may use data from Transunion.
Why should I check my credit score before applying for a mortgage?
Some soon-to-be borrowers make the mistake of applying for loan or mortgage products without knowing their credit score and their chosen lender’s stance on whether they’ll lend to someone with their circumstances.
Always check your eligibility before applying for any line of credit to avoid damaging your credit report. Lenders can see your previous loan applications when accessing your credit report and a recent rejection for credit can hinder your ability to get approved for a future loan.
What information do credit reference agencies have?
Credit reference agencies obtain information from you from various different sources and in general, keep the following information:
The Electoral Roll. This shows how long you've been registered to vote at your given address
Public records. This shows any county court judgments, bankruptcies, IVAs, Debt Relief Orders and Administration Orders.
Account information. This shows the financial status of your existing accounts, how much you've borrowed and whether or not you've paid on time
Home repossessions. This shows if you've information This is information from members of the Council of Mortgage Lenders about homes that have been repossessed
Associated financial partners. This shows all of the people who you are financially connected to. For example, you could have a joint bank account
Previous searches. This shows companies and organisations who you have looked at in the last 12 months. For example, if you made an application for credit in the last 12 months, it would show here.
What credit score is considered good?
Credit scores can vary for individuals depending on the credit reference agency they have used because each CRA uses a slightly different scoring system.
Check your score across a multitude of CRAs so that you are aware of their scoring system and know what lenders will see when searching for your report.
This can help you slowly build your credit score, appeal any mistakes and make the changes necessary to present yourself as a reputable borrower.
If I meet a minimum credit score will I be accepted for a mortgage?
Not necessarily as lenders take lots of factors regarding your affordability into consideration. You are more likely to be accepted if you meet a minimum score as this suggests that you’re a careful borrower.
However, it’s also important to prepare for your application for a mortgage by organising your:
Pay slips and proof of bonuses/commission and tax paid or self-assessment tax accounts if you’re applying for a self-employed mortgage
Passport, birth certificate and driver’s license (if relevant)
Proof of deposit (e.g. latest 3 months’ savings account statements)
Proof of address (e.g. utility bills or credit card bills)
Gift letter; If you're receiving help with your deposit, the lender will need a letter from the person providing the gift explaining that they are gifting the deposit and understand that they in no way own any share of the property being mortgaged or expect the money to be paid back.
Lenders work across a lot of different criteria, and your credit score is just one part, so even if you do not meet the ‘minimum’ levels, you should speak to one of our specialist mortgage advisors to see how we can help.
If I have a low credit score, do I need a large income to get a mortgage?
When a mortgage lender is deciding whether you meet their criteria for a loan, they will look at the factors that affect affordability. Your income certainly impacts your ability to repay your mortgage and having a sufficient income is important.
Lenders will look at the amount you earn against your outgoings which may include debt repayments, bills, car insurance or other travel expenses. If your current income could comfortably cover your current outgoings as well as your new mortgage repayments and any associated costs, a lender may decide to approve you.
Having a lower income that may not stretch to cover the above, may cause concern for some lenders, especially if you already have a low credit score. Your broker can take the time to listen to what you need from mortgage and can calculate the most affordable and viable route.
How much deposit do I need to get a mortgage with a poor credit score?
It may be the case that to access your chosen lender’s rates and meet their terms, you have to deposit a higher percentage of the properties market value. That being said, the amount of deposit you need to get a mortgage will vary depending on a whole host of factors including your age and the type of property you want to buy.
There isn’t a typical deposit size, but some lenders ask applicants to deposit as much as 30% for a mortgage if they have a poor credit score or low affordability.
For a home valued at £200,000 that would equate to a £60,000 deposit. Large deposits aren’t a viable option for a lot of borrowers and thankfully there are a handful of lenders that appreciate this and may be more willing to lend under more flexible terms.
Can I get a mortgage with a low credit score?
It can be reassuring to know that having a low credit score doesn’t rule out the possibility of a mortgage, especially if you have the help of a mortgage broker as they can quickly show you where the lenders are that may be able to offer you the finance you need.
Some lenders may even take the reason behind the bad credit into account, as well as the severity of the problem and if it’s been resolved.
In short - even with severe and recent issues on your report that have resulted in a low credit score, it may still be possible to obtain a mortgage. Ask a broker to check your credit score and source a choice of relevant lenders.
How can I improve my credit score for a mortgage?
There's many ways to improve your credit score but in general, it's important to follow these best practices:
Make all of your credit card payments on time. This will avoid any late marks on your credit report and impact.
Don't make any applications for credit within 12 months of a mortgage application. These are recorded as 'hard searches' where too many of these look like you're relying too much on credit which can impact your overall score.
Stay out of your overdraft and ensure your credit card utilisation is low - aim for keeping your balances below 25% as this can help your score and gives the impression that you're in control of your spending.
Check your credit report regularly to stay on top of your borrowing and get a clear overview of your debts and credit score.
How can I get something wrong on my credit report removed?
If you think that information on your credit report is wrong, you have the right to dispute it with the company that has registered the error. This can sometimes be a tedious process but errors on credit reports can delay mortgage applications and can exclude you from access to the best rates.
If you decide to seek help from a mortgage broker, you’ll be happy to know that they can assist with helping you to get bad credit removed from your record as well as advising you on how to improve your score with the CRAs in the UK.
Credit score FAQS
Do all credit reference agencies use the same scoring system?
Each credit reference agency (CRA) uses a slightly different scoring system that determines whether a score is deemed "very poor", "poor", "fair", "good" or "excellent".Where the scoring criteria is different between each CRA, it always pays to keep a close eye on each CRA as its likely that a lender will check one or more of these during the mortgage application process.
Here are the most up to date score ranges for the most popular credit reference agencies:
- Equifax 0-1000 (previously 0-700)
- Experian 0-999
- Transunion 0-710
Can I get a mortgage with a 600 credit score?
Credit reference agencies such as Equifax and Experian have scoring systems which classify scores of 600 as fair, so if your circumstances meet your chosen lender’s other criteria, it may be possible to get approval for a mortgage. Your income to debt ratio will also affect your chances of acceptance as well as your job, regularity of income, age and the type of property you’re trying to mortgage.
Can you get approved for a mortgage with a 550 credit score?
While it’s true that a lower credit score of 550 or less can decrease the choice of lenders who are willing to accept you, it doesn’t mean that getting a mortgage is completely out of the question.
To find the lenders with an appetite to loan to you specifically, ask a broker who can use their access to the market as well as their knowledge of lender criteria, to highlight the best deals for you.
How can I boost my credit score by 100 points?
There are simple things you can do such as joining the electoral register, clearing your debt and staying out of your overdraft. Avoid applying for any credit in the lead up to applying for a mortgage too.
How can I quickly raise my credit score to buy a house?
If there is an error on your credit report, it may be possible to have it cleared from your report within 30 days, depending on the creditor’s efficiency and process. This can help to improve your credit score quickly although registering to vote and paying off debt, if affordable, can also help to build your credit score and your borrowing capacity over time.
How many years of credit do I need to buy a house?
There isn’t necessarily a minimum amount of years that you need to have had a “good” credit score but aiming to keep your report clear of unpaid debt and credit issues for as long as possible can help as future creditors will be able to see a good record of money management when it comes to checking your affordability for a mortgage.
If you do decide to take out credit, always pay it back on the agreed date and with the full amount. Different lenders have different criteria so even if your credit report is a newly improved one or perhaps still in need of repair, it may still be possible to get a mortgage.
What is a good credit score for my age?
Your age can impact your ability to get a mortgage as some lenders can question older borrower’s abilities to repay their mortgage within the term date. However, there isn’t necessarily a perfect age you need to be to get a house or a score you need to have achieved by a certain age.
Everyone is different and our credit scores reflect a fraction of a lender’s decision when assessing your mortgage application. Having a good credit score can help but remember that there are other factors to consider both for you and your chosen lender.
Can I get a mortgage if I’ve been declined because of a low credit score?
Getting declined for a mortgage is not the end of the road and it’s possible that there may be an alternative optio elsewhere. We’ve helped lots of people who have been declined in the past and our advisors can check your eligibility to avoid impacting your credit score further.
They can also give you advice to help build your score and prepare your application so that you’re in the best position to successfully gain approval.
Contact a low credit score expert
On the phone at 02380 980304 to speak with a broker directly
Via our online chat with practical advice and help
Via our contact form where you can send your questions
