What credit score do you need for a mortgage?

One of the most important parts of preparing for a mortgage is making sure your credit score is up to scratch. A good credit history can make the process far simpler as lenders will view you as less of a credit risk, so it’s vital to check your score in advance so you know what you’re dealing with.

But what credit score do you need if you want to stand the best possible chance of being accepted for a mortgage? We take a closer look.

What is the minimum credit score needed for a mortgage?

The simple (or not-so-simple) answer is that there isn’t a minimum score you need to be accepted. Lenders will take a whole range of factors into consideration when deciding whether or not to offer you a mortgage, and your credit score is only a part of that.

That said, while there’s no set minimum, the higher your score the better your chances. Lenders need to be confident that you’re not a credit risk and so will look at your history of repaying debts to gauge that.

A higher score becomes even more important if you’re seeking a higher loan-to-value (LTV) mortgage; lenders are already taking on additional risk at this level, and so they’ll want to mitigate that by ensuring your credit history is solid.

A higher credit score can also mean you’re more likely to be approved for better mortgage rates, and can access more competitive deals. Yet even if you’ve got the perfect score, there’s no guarantee, as you still need to meet the lender’s other requirements.

How important is your credit score when getting a mortgage?

Although things like income and affordability are crucial factors when getting a mortgage (we’ll cover more of these later), a lender may not be willing make you an offer if your credit score isn't up to scratch.

Your credit score is a permanent record of how well you have handled credit in the past, and lenders will use this history to determine how much of a risk you are in terms of borrowing. If you have previously had trouble making repayments on any form of credit or debt, this can result in a bad credit score.

Examples of this include missing repayments on or failing to pay:

• Credit cards
• Personal or secured loans
• Mobile phone contacts
• Unauthorised overdrafts (or when requested for an approved overdraft)
• Hire purchase agreements
• Mortgages
• Household utility bills (electricity, water, gas, etc.)
• Council tax

In addition, things such as being declared bankrupt, entering into an individual voluntary arrangement (IVA), having county court judgements (CCJs) or other legal rulings for debt against you, or even being placed on a debt management plan, will all also have a negative effect. Find out more about what could affect your credit score.

Having a ‘bad’ credit history means lenders will consider you as being at higher risk of defaulting (i.e. missing repayments) and so may not lend to you. Conversely, a good credit history can give a lender more confidence that you’ll repay the mortgage, making it more likely that you’ll be accepted. A better credit score can mean you’ll have access to more competitive deals and ultimately better mortgage rates, which could have long-term benefit for your finances.

This all means that your credit score is a key part of your mortgage application, so it’s important to make sure it’s as healthy as possible before you apply.

Sarah Wilby, Mortgage and Protection Adviser and Later Life Specialist at our partner, Mortgage Advice Bureau, explains more in the video below:

What other factors do mortgage lenders look at?

However, it isn’t all about your credit history; there are some other common things that lenders will look at to assess your suitability for a mortgage and decide whether to approve your application. These include:

Income

Assessing your income will be a key part of the application process as lenders need to make sure you can afford the repayments based on your current salary, especially after taking your outgoings into account. Find out what income you can use for a mortgage application.

Existing debts

Having some existing debt is fine and expected by lenders, but they will want to check that you are managing those debts effectively and that any previous bad credit issues have been resolved.

Living costs

Mortgage affordability checks are universal among lenders, so they’ll want to know what your current outgoings are. This will include things like current rent/mortgage payments, utility bills, grocery shopping, fuel and childcare costs, among others. Affordability checks are there to ensure that you don’t take on more debt than you can comfortably handle, so be open and honest in your answers.

Employment details

Your salary and how long you’ve worked for an employer will be critical factors, and you’ll be expected to provide payslips and P60s as evidence. If you are self-employed then the lender will likely want to see your accounts – most lenders will accept two years’ worth of accounts, while some may want longer and others (albeit a minority) will accept less than two years. A mortgage broker can help to identify which lenders will find your circumstances acceptable.

Your deposit

Try to have a 5% deposit as an absolute minimum. Generally, the bigger your deposit, the better, as it’ll lower your LTV and could reduce your mortgage rate – and your repayments – in the process.

The mortgage you require

You should always consider the cost of the house and the LTV ratio you’re looking at as well. Smaller borrowing amounts mean less risk to the lender, so it’s important to make sure you’re not overstretching yourself, particularly if you’re worried about a less-than-perfect credit history. Find out how much you may be able to borrow using our calculator.

Credit scores and joint mortgages

If you’re getting a joint mortgage, the credit score of both applicants will be considered by the lender. This means that if one borrower has a significantly poorer score than the other, it can negatively affect the whole application and could mean you’re less likely to be approved, and you could face higher interest rates if you are.

Some lenders will combine the scores of both applicants to see if it meets their requirements, which means that if one applicant has a particularly high score, the lower one may not cause as many issues. Yet lenders will still need to determine the extent of the credit problems experienced – a few missed payments will pose less of an issue than things like insolvencies or repossessions – and will factor this into their decision.

Just bear in mind that if you’re applying for a joint mortgage with someone, you’ll become financially linked with that other person – which could potentially have repercussions if the other person’s score is low, not only for the mortgage but for any other credit applications you take out in the future, even if it’s individually. If you’d rather not have this kind of link, it may be worth considering taking out a mortgage solely in the name of the borrower with the highest credit score.

Can you get a mortgage with bad credit?

Having a bad credit rating will not automatically prevent you from obtaining a mortgage, though it can make the process harder and it’ll almost certainly limit your access to the best mortgage rates, which means you’ll likely be charged a higher interest rate than if you had a good credit history.

Yet this all depends on the severity of your credit issues, including how bad your score is and how recent the problems are. For example, a CCJ is likely to make it much more difficult to secure credit, whereas missed payments from several years ago – provided you can show that your recent credit management is much better – may not have such a negative impact.

You may need to seek out providers who specialise in bad credit mortgages, though some high street names may consider your application as well. Make sure to speak with our preferred mortgage broker who’ll be able to advise on your specific situation and can help you find the right mortgage deals to accommodate.

What if I have no credit history?

It’s important to note that having no credit history at all can sometimes be just as detrimental as having a poor credit score, which means that lenders will still consider you a higher risk. This is because if you’ve never taken out any form of credit before, the lender has no way of knowing how good you are at repaying it.

This is why it’s often recommended to take out a credit card in advance of your mortgage application to prove your ability to manage credit effectively. Credit repair cards may be your best option here, but just make sure you only use it for small purchases and repay the full balance every month to avoid interest charges.

How to improve your chances of getting a mortgage

One of the best ways of improving your chances of getting a mortgage is working on your credit score in advance of your application. Check your report for any errors – and ideally rectify them – and make sure there are no old financial ties that need to be severed, and always ensure you’re effectively meeting your credit obligations. Try not to apply for any other credit in the months leading up to your mortgage application either, as these will show on your report and could indicate to lenders that you’re financially struggling.

Other things you can try include:

• Building up a larger deposit. The bigger the deposit the less risk the lender is taking on, and if you manage to get on a lower LTV band it could result in a lower mortgage rate too.
• Boosting your income. Having a larger income shows the lender that you can comfortably afford the repayments, and means they may be more likely to approve your application even if you’ve got poor credit.
• Repaying your debts. If you’re able to, it may be worth repaying some of your existing unsecured debts ahead of your application. This will boost your credit score while also reducing your monthly outgoings, both of which could work in your favour when applying for a mortgage.
• Reviewing your spending. Simply looking at your current outgoings and noting where cutbacks can be made could be a great way to boost your profile to lenders, as fewer outgoings means your affordability is improved.

Find out more ways to improve your chances of getting a mortgage in our guide.