What credit score do I need to get a mortgage?

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Many people don’t know their credit score and fewer still understand the impact it can have on a mortgage application.

This guide explores the relationship between the two, providing information on what credit score is required when applying for a mortgage, as well as how to improve your score.

What credit score do I need to get a mortgage?

There is no fixed score that guarantees acceptance. This is because different lenders will look at different credit reports and each will have their own lending criteria. Because of this, there is no "one-size-fits-all" advice that can be given.

As a rule of thumb, the higher your credit score, the better your chances of being accepted for a mortgage. While no specific advice can be given, there are a few red flags that could have a negative impact: these are explored below.

 

What is credit rating?

Credit rating is a numerical representation of your financial behaviour, based on your history of spending, borrowing and repaying. It takes into account credit cards, overdrafts, bills and more.

It provides an important component of your Data Self, which lenders will look at when deciding whether you are eligible to borrow.

A good credit rating demonstrates your ability to manage money well, which lenders take as an indication that you will be able to repay your mortgage in full and on time, thereby reducing their risk.

 

How is your credit rating checked?

Each lender will have their own method for checking an applicant’s credit rating, but most will use one of the UK’s three main credit reference agencies: Experian, Equifax and Callcredit.

The lender will request a credit report from one of these agencies and use their findings when making their decision.

 

What is in a credit report?

The reports from each of the three credit reference agencies will be different:

  • Experian rate you out of 999, with a score above 700 generally considered good, and above 800 excellent
  • Equifax rate you out of 700, with a score above 475 considered good
  • Callcredit rate you out of 5, with higher scores being better

As another rule of thumb, a credit rating at a minimum of good will be required for most mortgages.

 

How can I improve my credit rating?

If you know or suspect that your credit rating may not be up to scratch, you can take steps to improve it (Request a report from one of the above reference agencies if you’re unsure about your credit rating score).

Steps which may improve your credit rating:

  • Avoid taking out credit within 6 months of applying for a mortgage
  • Check you do not have any neglected credit cards
  • Make debt repayments in full and on time: try to overpay if possible
  • Make a budget and stick to it: try to end each month with a positive bank balance
  • Stay within your overdraft and credit limits

Lenders will consider signs of financial stress as red flags: this could include things like only making minimum debt repayments, taking on extra debt, or relying on your overdraft.

In short, a good credit score will boost your chances of being accepted for a mortgage. While there is no one-size-fits-all advice that can be given, avoiding red flags and taking steps to be sensible with money is a good start.

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