What Credit Score Do You Need for a Mortgage?
Is there a minimum credit rating?
Credit scores and mortgages go hand-in-hand in a sense – generally speaking, those with a higher credit rating are more likely to be eligible for better mortgage deals and interest rates, and less reliable borrowers may be refused credit or offered a mortgage at a higher monthly rate.
It’s well-known that you will benefit from having a good credit score or credit history when applying for a mortgage, but many questions remain. Is there a specific three-digit number that you should aim for? Should you still apply for a mortgage if you have a poor or fair credit score?
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Here, we explain all you need to know about credit scores and mortgages.
What credit score do I need for a mortgage in the UK?
There is no universal credit score, as it varies with each credit reference agency (CRA), meaning that there is no set credit score that you need for a mortgage.
You should, however, be wary of applying for a mortgage if you have a poor credit rating, as this could lead to a declined application which could, in-turn, make it even more difficult to get credit in the future.
When you apply for a mortgage, lenders use your credit status to determine their own credit score for you, which helps them decide whether you are creditworthy or not.
Whether or not you eventually get accepted for a mortgage is based on a variety of factors. Not all lenders will use the same methods when deciding if they will offer you a mortgage, but the majority of them will consider the following:
- Information on your credit report (your credit history, public record, etc.)
- Information on your application form
- Details they already hold on you (from a bank account with them, for example)
- The lender’s unique lending policy
- Your earnings and outgoings
What is a good credit score for a mortgage?
There is not one specific credit score that is universally considered ‘good’, as it differs with each CRA, which you can read about in our full guide: What is a Good Credit Score in the UK?
However, according to Experian, here is what each credit rating band means in terms of your likelihood of being accepted for a mortgage:
- Excellent: “You could be in line for the best mortgage deals with lower interest rates”
- Good: “You could get most but not all the best mortgage deals”
- Fair: “You could get good mortgage deals with reasonable interest rates”
- Poor: “You may get mortgage deals, but with higher interest rates”
- Very Poor: “You may be declined a mortgage or find it harder to get one without very high interest rates”
This is why it’s important that you check your credit report regularly, as it can give you a good indication of whether or not you will be accepted for a mortgage.
In terms of what credit score is needed for a mortgage in the UK, there is no straightforward answer. However, it is generally accepted that you are more likely to be accepted for a mortgage if you have a better credit history, so it’s always worth improving your score before applying.
Is there a minimum credit score for a mortgage in the UK?
There is no exact minimum credit score required for a mortgage, but as we have established, your chances of being accepted by a lender are lower if you have a poor credit rating.
Experian’s website states that you “may get mortgage deals” with a ‘Poor’ credit score, but these will usually come with higher interest rates. It also says that those with a ‘Very Poor’ credit score “may be declined a mortgage or find it harder to get one without very high rates”.
This means that your credit score should be ‘Fair’, ‘Good’ or ‘Excellent’ if you want to get the best deal for yourself, but it’s worth remembering that even those with maximum credit scores are not always guaranteed to be accepted.
Can you get a mortgage with a ‘fair’ credit rating?
Experian has stated that those with a fair credit score or rating “could get good mortgage deals with reasonable interest rates”, but your chances of getting the very best deals and competitive interest rates are lower than they would be if you had a ‘Good’ or ‘Excellent’ credit score.
Can you get a mortgage with a ‘poor’ credit score’?
While it can be more difficult to get a mortgage with poor credit score, it is by no means impossible. You may, however, need a larger deposit than other borrowers and your interest rates are likely to be higher, so you will unfortunately be paying more for your mortgage loan overall.
You should, however, improve your credit score as much as you can before applying for credit, as being rejected could damage any future applications for credit, such as loans or credit cards.
Read more: How is Interest Calculated on a Mortgage?
Check your credit score
Checking your credit score before applying for a mortgage is crucial in order to give you an indication of whether or not you are likely to be accepted for credit, and what types of deals you may be eligible to receive.
To get an accurate idea of your credit status, you should check your credit score using a multi-agency report by tapping the button below.
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