There isn’t a specific credit score you need for a mortgage, and that’s because there isn’t just one credit score.
When you make an application for a mortgage or other type of credit, lenders work out a credit score for you. This is to help them decide if they think you’ll be a risk worth taking - if you’ll be a responsible, reliable borrower and likely to repay the debt. Usually, a higher score means you’re seen as lower risk – the more points you score, the more chance you have of being accepted for a mortgage, and at better rates.
How do lenders make their decisions?
Not all lenders think the same way, and they may have different ways of making their decisions. But all of them will look at some key factors to help them decide. These include:
- information on your on your credit report including your credit history and public record data (e.g. CCJs and IVAs)
- information you’ve given them on your application form
- information they may already hold on you, for example if you have a bank account with them
- their own lending policy, which may be different from those of other lenders
Looking at your credit report will give them a detailed insight into your credit history, and will show things like how much you owe on credit cards, if you’re registered to vote and if you’ve missed payments in the past. They’ll put that all together and give you a credit score of their own.
Mortgage affordability
But it isn’t just about your credit score. Mortgage lenders will want to see if you can afford your mortgage before they lend you the money, and be less of a risk to them. So as well as looking at your credit history they will look at how much you earn, and how much goes out. Not only credit repayments but regular, fixed costs like childcare, council tax, season tickets and other outgoings you have on a monthly basis.
If you can show them that you could afford your monthly mortgage payments even if your life situation changed or if interest rates (and your monthly payments) went up, it may help you get a mortgage even if your credit score is not the highest.
What can your Experian Credit Score tell you?
The credit score you need to get a mortgage varies, as there’s no one credit score or universal ‘magic number’. However, if you have a good credit score from one of the main credit reporting reference agencies such as Experian, you are likely to have a good credit score with your lender. Checking your Experian Credit Score before you apply for a mortgage can give you an idea of how lenders may see you, based on information in your Experian Credit Report. It can also help you work out if you need to improve your credit history before making your mortgage application.
What is a good credit score to get a mortgage?
The Experian Credit Score is based on the information in your Experian Credit Report. It runs from 0-999 and can give you a good idea of how lenders are likely to view you. The higher your score, the better the chance you have of getting the mortgage you’re after.
This table is a general guide to how lenders may see you, based on your Experian Credit Score - of course there are other factors involved, in particular how much deposit you have - which would bring the loan-to-value (the percentage of the overall cost that you need to borrow) down and could give the chance of lower interest rate deals.
Excellent
961-999
You could be in line for the best mortgage deals with lower interest rates
Good
881 - 960
You could get most but not all the best mortgage deals
Fair
721 - 880
You could get good mortgage deals with reasonable interest rates
Poor
561-720
You may get mortgage deals, but with higher interest rates
Very Poor
0-560
You may be declined a mortgage or find it harder to get one without very high interest rates
What if my mortgage credit check was poor?
Getting a mortgage for bad credit is by no means impossible but it will probably be harder and is likely to mean you’ll get high interest rates and need a large deposit.
Many people have poor credit scores simply because of their life situation - young adults with a short credit history, people who’ve not been in the UK long.
Mortgage lenders want to know if you can reliably keep up to date with monthly repayments and not go into debt. So showing them you can manage simple credit cards, mobile phone contracts and even some utility services could help you boost your credit score.
Improve your credit score for a mortgage application
One of the most important factors is to make credit payments on time. This ensures you don’t get any extra charges and lets you avoid having any missed or late payments on your credit report. Three more things to remember are:
- Avoid applying for credit in the six months before your mortgage application. Each time you apply for credit, a hard search is recorded on your report – too many of these can make it look like you’re overly reliant on credit
- Register to vote, as being on the electoral register helps companies confirm who you are and where you live
- Stay within your credit limits – if possible, keep balances at 25% or less of your limit, as this may help your score
And don’t forget to check your credit report to make sure the information on it is accurate and up-to-date - even a small change in the way your address is noted can affect your credit score.
If you find anything on your credit report that needs correcting - e.g. an address or a payment - get in touch with the lender in question and ask for them to amend it. Alternatively, we can contact the lender on your behalf.
Compare mortgages with Experian