What credit score do you need for a mortgage?

In this brief guide, we are going to answer the question “what credit score do you need for a mortgage?”.

What is your credit score?

Your credit score is a number which indicates your level of creditworthiness. Your credit score is provided to you by the credit bureaus in the UK.

There are four credit bureaus in the UK, Transunion, Crediva, Equifax and Experian.

Each credit bureau calculates your credit score in a different way but all collect the data needed to calculate your credit score from credit providers, in some cases utility providers, government records etc.

What credit score do you need for a mortgage?

Although it is very hard to say for sure, most mortgage lenders will require you to have a credit score which is good. This will be a different number based on the credit bureaus you get your credit score from but even those with bad credit can still get a mortgage through bad credit motgage lenders.

If you are concerned about your credit score affecting what mortgage you can get then the best thing to do is to speak to a mortgage broker to see what your mortgage options could be. 

You can also use a mortgage affordability calculator to determine what your current mortgage affordability is.

The maximum credit scores with the major credit bureaus in the UK are as below:

Experian’s maximum score is 999

Equifax’s maximum score is 700

TransUnion’s maximum score is 710.

Credit bureau	Maximum credit score	Good credit score
Experian.	999	750
Equifax	700	500
TransUnion	710.	450

In reality, the credit score you will need for a mortgage will depend based on the mortgage lender.

This is because different mortgage lenders have different lending criteria and a different minimum credit score which they may accept for a mortgage.

What credit score is needed to buy a house in the UK?

The credit score you may need to buy a house in the UK will differ from one mortgage lender to another. This will also depend on what credit bureau the mortgage lender uses to obtain their credit score data.

The different credit bureaus in the UK use different credit scoring Experian gives you a score which goes all the way to 999, whilst Equifax gives you a credit score which goes all the way to 700.

A score of 800 for Experian and 475 for Equifax will likely be good enough to buy a house in the UK.

In reality, the credit score you will need to buy a house in the Uk will depend on a host of factors inclduing:

Your mortgage deposit

Your mortgage term

Your personal circumstances

The type of mortgage you are after (if it is a buy to let mortgage then this may require a higher credit score)

The type of property you are buying (e.g non-standard construction property may require a higher credit score)

You should always take steps to build your credit score before buying a house in the UK.

What is a hard credit check mortgage?

A hard credit check is a check which a mortgage lender will undertake before giving you a mortgage.

A hard credit check will provide your full credit file to the mortgage lender and will allow them to see every record on your credit file which has been there for the past 6 years.

This will include:

All hard credit searches on your credit file

All credit accounts on your credit file

Your repayment history on your credit accounts

If you are registered on the electoral roll and at which address

The addresses on your credit account

If you have a CIFAS register on your credit account.

Any county court records on your credit file such as a county court judgement

If you have had a home repossession

If you have been made bankrupt

When you initially make a mortgage application you will usually have the option to go through a mortgage eligibility checker to see if you are eligible for the mortgage product you are applying for. 

This mortgage eligibility is usually done with a soft credit check.

A hard credit check will leave public footprints on your credit file which everyone can see.

When a hard credit search is conducted on your credit file it usually pushes your credit score lower by a bit.

If you conduct numerous hard credit searches then your credit score will fall even lower.

This is usually only the case when you are making numerous mortgage applications from different lenders. 

If the same lender runs a hard credit check on you multiple times then this will have little to no effect.

When you make a mortgage application the credit check carried out will usually remain on your credit file for at least 12 months.

What is a soft credit check?

A soft credit check is a credit check which only you can see. It does not leave a public footprint on your credit file.  

A soft credit check is used to determine if you can afford the credit products you are after.

A soft credit check will usually only pull back some basic details from your credit file rather than your full credit record.

Not all mortgage lenders conduct soft credit checks and some will only conduct hard credit checks. 

You should always inquire with a lender on if they conduct a soft credit check or if they conduct a hard credit check before making an application.

Usually, a lender will conduct a soft credit check and will then let you know if you are eligible for the product before you make a full credit application.

Once you have made a full credit application then a hard credit check will be carried out.

How does a mortgage credit check impact your credit score?

A mortgage credit check will impact your score if it is a hard credit check as these push your score down by a few points.

If you carry out numerous hard credit checks as you are applying with numerous mortgage lenders then this will push down your credit score even more. 

On the other hand, a soft credit check does not push down your credit score and is not visible to anyone but you.

How many hard credit checks are done when applying for a mortgage?

Usually, a hard credit check will be done twice during a mortgage application. The first when you make your initial mortgage application and the final one before mortgage completion.

The second hard mortgage credit check is done to ensure nothing significant has changed since you were given the mortgage offer.

Does being declined for a mortgage harm your credit score?

There is no way to note a decline on a credit file but a mortgage lender who sees a hard credit check from another mortgage lender on your credit file will be curious as to why the mortgage application didn’t proceed further. 

They may inquire about this and this may form the basis of their decision on your mortgage application.

To avoid this situation it may be good to use a mortgage broker who can place your mortgage application with mortgage lenders who are more likely to give you a mortgage offer.

Check your credit score before applying for a mortgage

The sensible thing to do before applying for a mortgage would be to check your credit score to see if you have a suitable credit score for a mortgage before making a mortgage application.

If you are concerned about this you could also ask your mortgage broker who would have some experience of what credit scores you may need to apply for a mortgage.

If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.

If you have bad credit or no credit score at all then you help improve your mortgage affordability by increasing the mortgage deposit available to you. You could do this by asking your family and friends to gift you money towards your mortgage deposit.

If you do this you may need a gifted deposit letter.

Alternatively, you could also use any of the government schemes below although some may not be able to help you as they may have a criterion which doesn’t allow them to help those with bad credit.

Some of these government schemes include:

• Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy– allows you to buy your home at a discount price.
• Preserved right to buy– same as above.
• Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

You can check if you are eligible for these government schemes by using a government scheme eligibility calculator.

Can you get a mortgage with a bad credit score?

Yes, you can get a mortgage with a bad credit score as there are now many mortgage lenders who specialise in bad credit mortgages.

Your ability to get a bad credit mortgage will heavily depend on your own personal circumstances, the type of bad credit and how long it has been since your credit score was damaged.

Bad credit could include:

A county court judgement

A debt management plan

A home repossession

A mortgage default

Missed credit repayments

Late credit repayments

A bad credit mortgage broker may be able to help you get a bad credit mortgage.

If you have a bad credit score then you should avoid applying to numerous mortgage lenders as every hard credit check on your mortgage application could reduce your credit score further.

How to improve your credit score before a mortgage?

There are various ways you can get a good credit score, we will list some of the steps you can take to get a good credit score below.

You can improve your credit score by doing the below things but you should be aware that improving your credit score will take at least a few months.

Open a bank account or credit account

The simplest thing you can do to establish or improve your credit score is to open a bank account or any other credit account. 

By opening a bank account you open an account which gets reported to the credit bureaus as an account on your credit report.

The longer you have this account open for the longer you will have a credit history. It usually takes 3 years from you opening an account which gets reported on your credit file before you will have any credit history which can be seen by others.

Opening a bank account also allows you to have an account on your credit file with a verified home address. This means it will be easier for you to access credit products in the future.

A bank account might also be the easiest way to a credit card as banks are more willing to offer credit cards to account holders as they can view your account history and see how credit worthy you are even if you have a low credit score.

Ask your bank for a small overdraft facility

To Build credit you need credit so one of the ways to improve your credit score or build credit is by having an overdraft. You then need to show good behaviour when you have access to this credit.

By asking your bank to give you an overdraft facility you will have a credit account open on your credit file which boosts your credit score. 

You will also have the ability to use your available credit, sticking to the 30% maximum credit utilization golden rule per credit account and thereby showing good credit behaviour which should boost your credit score even further. Always repay your overdraft as soon as you can to avoid any fees.

Get a Household Utility in your name

Some utility accounts are now being reported on your credit file and having one in your name is a very good way to improve your credit score. This means that your payment history on your gas, electric and telephone service will affect your credit score.

By getting yourself named as the account holder on these services you can establish and improve your credit score if your bills are paid on time and there are no balances or defaults on the Utility account. 

If you live in a shared accommodation be sure to avoid any disputes and get payment for utilities well in advance so as to avoid any of your house mates holding you hostage and ruining your credit file.

Do you live with your parents? Ask them to put your name, date of birth and address on the utility bill. This will open a new account on your credit file and ensure you begin to get credited for the regular payments being made on the account.

If payments are missed on the account this could negatively affect your credit score so you must ensure payments are not missed. 

You can also simply get a cheap phone on contract. A £5/month contract will be achievable with little or no credit history as the risk of default is very low and making regular repayments to your phone contract will boost your credit file.

You should avoid applying for more expensive phones with no credit file or score as this could damage your credit score even further even though you don’t have one.

Not all utility providers report your payment history to the credit bureaus so you may want to inquire with the utility provider before opening an account.

Keep your credit utilization below 30%

Your credit utilization is one of the factors that affects your credit score. The golden rule is to use no more than 30% of your available credit. If you are currently using above this then reducing your credit utilization below this limit will help improve your credit score

Pay down your credit card balance & other debts

Credit card balances and credit debts are recorded on your credit file. These balances have a negative impact on your score(especially when your revolving debt is over 30% of your available revolving credit) as well as costing you in interest rate charges and fees. 

Paying down your credit card balances, loan balances or any default you have on utility and credit accounts will help improve your credit score.

Paying your credit card balance in full each month

Making only the minimum payment on your credit card means you have an outstanding balance which is recorded on your credit file.This negatively influences your credit file. Paying your credit balance on time full in each month will help improve your credit score

Make your credit repayments on time

Missing credit repayments negatively impacts your credit score. Keeping up with your monthly credit repayments will see your credit score improve gradually.

Making your credit repayments on time will also ensure you avoid negative credit markers such as:

• Defaults
• County court judgments
• Missed repayments
• bankruptcy

Get on the electoral roll

The easiest way to improve your credit score is to register to vote as this data is recorded on the public register which the credit bureaus check and include in your credit file. This is the first way to prove your identity and by far the easiest.

In the future when you apply for credit or a credit check is done, this will be the basis of their verification method for you and helps make you seem more creditworthy. You should check with your local council here if you are already on the electoral roll and if not you can register to vote here.

If you are not eligible to vote in the UK you will not be able to get on the electoral roll. In this case you can get a similar benefit by submitting a document to either Experian, Equifax or callcredit proving your identity and address. You can then ask them in writing to confirm that they have verified your identity on your credit file

Get a credit builder card

To improve your credit score you could get a credit builder card. Credit Builder cards are similar to secured credit cards as they are targeted towards people with low or no credit scores.

Credit Builder cards do not require security deposits but as with secured credit cards they will have low credit limits and high APRs. 

A student credit card will likely be available on the same terms as a credit builder card. The best place to get this might be from your bank as they will be more likely to approve you for this type of card due to already having an idea of your income and expenses.

Store credit cards are usually easy to get approved for too.There are also credit builder prepaid cards which charge a monthly fee which is then recorded on your credit file as repaying a debt. This helps you build your credit score.

Get a secured credit card

Secured credit cards can be used to improve your credit score as they allow you to show you can make credit repayments, they add to your available credit which will improve your score and they allow you to show a low credit utilization which will improve your credit score.

Getting approved for most credit cards will be difficult if you have a low credit score but a secured credit card can help you overcome this. 

Secured credit cards will approve you if you pay a deposit as part of your secured credit card application.

This deposit is usually your credit limit or a percentage of your credit limit. Secured credit cards aren’t very common in the Uk. 

Capital one was known to offer one and you should contact them to see if this is still available. 

You should be aware that secured credit cards will have low credit limits and high APRs. This can lead you to fall into serious debt if you fail to keep up your monthly credit repayments.

Get a credit builder loan

Another way to improve your credit score is by using a credit builder loan.

Credit Builder loans, just as they sound, help you build credit. The idea is you take out a loan but rather than receiving the loan funds these are deposited in an account(usually to earn interest) and you make repayments to the loan provider every month. 

As you make these loan repayments on time your credit file records this and your credit score improves. At the end of the loan term you get all your loan repayments and whatever interest you have gained.

Loqbox is a credit builder loan provider in the UK.

Get a cosigner for a credit card or loan or become an authorised user

If you can’t get a credit builder loan, credit builder card or secured credit card then your next bet to help you improve your credit score will be to get yourself a cosigner on a credit card or loan.

You should really only do this if you are likely to repay your credit cards or loans on time and in full every month.

If you fail to make your credit card repayments on time then this may affect your co signer’s credit score too. If you make these repayments on time your credit score will rise and the payments will be registered on your credit file for at least 6 years.

Getting a cosigner on a credit card or loan creates a financial relationship between yourselves. This means any negative behaviour from them might affect your credit score negatively and vice versa. 

A cosigner essentially allows you to qualify for credit and in some cases cheaper credit. A cosigner will also be legally responsible for any debt owed on the account if you default.

Another way to help improve your credit score is by becoming an authorised user on someone else’s credit card.

The difference between authorised users and cosigners isn’t that much. Becoming an authorised user on someone else’s credit card will help you improve your credit score if the main card holder makes all their repayments in full and on time each month as well as keeping their credit balance low.

some credit card companies might not take you into account and may not collect this data and hence report it on your credit report.

You should contact the credit card company asking them to report the fact that you are an authorised user on the credit card to the credit bureaus. 

Becoming an authorised user does not give you any liability, so if the main card holder defaults you won’t be held liable but it does affect your credit score if the account is mismanaged or goes into default.

Keep your credit accounts open as long as possible

Closing credit accounts can negatively impact your credit score as this reduces the number of accounts with a credit history. This is especially worse if the credit account you close is one with a long history. The account will no longer be open and will therefore not count towards the majority of your credit score. 

Unused credit accounts which don’t have long histories can be closed as they do not add to your credit score. Having access to too much unused credit may also be seen as negative.

Avoid payday loans

Most lenders look down on payday loans as they view people who take out these loans to be desperate and hence financially irresponsible.

Paydayloans will therefore have a negative influence on your credit file and you should avoid them.

Avoid making too many credit applications

Making applications for utility or credit can reduce your credit score. This is because everytime a utility or credit provider is about to open a new account they will do a hard credit search. You should only apply for credit or utility which you are pre-approved for. If you make multiple credit applications then multiple hard credit searches will be done on your credit file.

This means your credit score will go lower as the credit bureau will view too many credit applications as you being desperate. If you stop making blind credit applications then your credit score will likely improve. 

You should always use an eligibility checker to see if you will be approved for credit or utility accounts before you apply. These checks are done with soft credit searches which only you can see.

Report your rent to the credit bureau 

Another way to improve your credit score is by reporting your rental payments to the credit bureaus.

If you currently pay rent or paid rent within the last 3 years you will be able to report your rental payments to the credit bureau and this will be an account on your credit file showing your payment history. 

Paying your rent on time will ofcourse improve your credit score whilst missed payments will reduce your credit score. The scheme is known as the rental exchange scheme and is currently only being offered via Experian.

Increase your available credit limit

Increasing your credit limit will reflect on your credit file and improve your credit score as it shows lenders are willing to trust you with more money as well as reducing your current credit utilization (how much you spend in relation to how much credit you have available. The golden rule is a maximum of 30%). 

You can ask your current card provider to increase your credit limit or let you know if you will be eligible for a credit limit. Also ask if they intend to run a hard credit search on you and do not consent to this unless they will pre-approve you for a credit limit increase.

Open a new credit card account

Opening a new credit account will be your next option if your current credit card provider will not increase your credit limit. You essentially accomplish the same things as your available credit limit increases. 

You must repay your balances on your credit card account every month and avoid using over 30% of your available credit. This is a good option if you want to improve your credit score.

Have a good credit mix

Mix things up a little by having a varying degree of accounts on your credit file. Like your partner, credit bureaus like to see you mix things up a little bit. By this, we mean that a proportion of your credit score is ranked by how diverse the different types of credit you have been utilizing is.

Examples include:

Revolving accounts (i.e. credit cards, store cards)

Installment accounts (i.e. home equity line of credit, auto loans)

Open accounts (utility accounts)

Increase your variety and your credit score will increase.

Ensure your registered address is the same on all your credit accounts

Any active accounts on your credit file should display your correct address. You can check the addresses on your accounts by viewing your credit file. Make sure all active accounts list your current address. This may improve your current credit score.

Check your credit score regularly

Checking your credit score regularly is one of the ways to ensure that the information on your credit score is indeed up to date.

It also informs you on what your credit score is and this allows you to have an idea of which credit providers may lend to you.

If you find any errors on your credit score or report you can contact all of the credit bureaus or the specific credit bureau where the error is mentioned and ask them to make the necessary corrections.

The credit bureaus will check and investigate the matter but in the meantime put a notice of correction on the record entry so that any third parties who are checking your credit score will be aware that the entry may be incorrect.

The credit bureau will usually let you know the outcome of their investigations within 28 days.

If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.

Remove negative financial links

You should check your credit file for financial links that you don’t recognise. Some financial links can reduce your credit file as this might mean your credit score is going down due to someone else’s bad credit behaviour.

Any financial links which seem out of the blue can be removed from your credit file. Financial links can be generated by just sharing apartments with someone else, getting a loan with someone else etc. You should ask the credit bureaus to correct this.As you remove these negative financial links your credit score should improve.

How your credit score affects your mortgage rate?

Every mortgage lender uses a risk-based system when deciding what mortgage rate they should offer you.

If your credit score falls within a high-risk rating and they allocate you a 5% mortgage rate in contrast to someone who has a credit score which falls into a medium risk rating and gets a 4% mortgage rate, you could see potential savings by taking steps to boost your credit score.

Example, a £400,000 mortgage over 25 years at a 5% mortgage rate will cost £701,508.05 over the term of the mortgage and have a monthly mortgage repayment of £2,338.36.

On the other hand, a £400,000 mortgage over 25 years at a 4% mortgage rate will cost £633,404.21over the term of the mortgage and have a monthly mortgage repayment of £2,111.35.

As you can see having a good credit score for a mortgage will save you a fair chunk of money over the term of the mortgage.

Aside from your credit score, mortgage lenders will also consider how your debt to income ratio will affect your mortgage affordability.

You should always try and reduce the amount of debt you have before applying for a mortgage.

FAQs: Credit score for mortgage

Below are some of the most frequently asked questions in relation to what credit score you need for a mortgage.

Using a mortgage broker

You may want to consider using an independent mortgage broker to get a mortgage.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we are going to answer the question “what credit score do you need for a mortgage?”. If you have any questions or comments please let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.