What credit score do I need for a mortgage?

May 10, 2022

Your credit score is a calculation of how risky you are to lend to. The higher your score, the better your chances of getting a mortgage. Many borrowers ask what credit score they need for a mortgage.

In this article, we answer that question and explain how anyone can improve their credit score and maximise their chances of getting a mortgage.

What is a credit score?

Lending money is all about risk. Mortgage companies want to lend to people they’re confident will pay back the cash, and that’s why they use credit scores.

A credit score is a simple way for a lender to see how good you are at managing finance, and how much money you’re currently borrowing.

If you’ve got no outstanding finance agreements and have made every payment on time, your credit score will be squeaky clean. If you’ve missed payments in the past, or have lots of credit agreements and debt, your score will be lower.

There’s no one credit score, instead, there are several credit score providers all of whom use different ways to calculate and display your credit score. Your credit score can be affected by many factors, and

It gets a little more complicated because the credit score you see may not be the same one your potential lender sees. Your credit score is an indication of your creditworthiness and can be used to help you improve your access to credit.

How is my credit score calculated?

Your credit score is a calculation of how reliable you are at borrowing money. It includes details of all your current and previous credit agreements, including things such as loans, bank accounts and credit cards. You’ll also find information on phone contracts, utility bills and more.

Your credit score also takes into consideration factors such as your area, whether you own your home or rent, if you’re on the electoral register or if you share accounts with a partner, for example.

What are the main credit score providers?

You can check your credit report for free, using Clearscore, Experian and Credit Karma. You should check a couple of credit reference agencies if you can, because the information they hold may be different.

Each of the credit reference agencies uses a different algorithm to calculate your credit score, and displays it in a different way. One thing they all have in common is the higher your credit score, the better!

Can I check my credit score?

Yes, you can check your credit score with all three providers. You’ll need to register online and provide some information to prove who you are.

Once you’ve registered with the main providers Experian, Equifax and Transunion, you’ll be able to access all the information that they hold about you.

Access your record and you will be able to see a full breakdown of your credit history, including:

Current credit agreements
Previous credit agreements
Payment history (including any gaps!)
Address information
Whether you’re registered on the electoral roll
Your personalised credit score

What credit score do I need for a mortgage?

It would be great if there was a single target for each credit reference agency, but sadly that’s not the case. There is no single credit score for a mortgage, and no minimum credit score that’s made public. However, we can be confident that anyone with a poor credit score or poor credit rating will struggle to get a mortgage.

Here’s what the numbers mean for each credit provider:

Experian’s system ranges from 0-999, and anything below 721 is considered poor.

TransUnion scores borrowers from 0-710 (for some reason) and also has five ‘rating’ bands (with five being the best and one the worst), and any score less than 566 (which is the bottom of band 3) is considered poor.

Equifax has a scale which runs from 0- 700 and anything below 380 is poor.

What are the benefits of having a good credit score?

The better your credit score, the more likely you are to get a mortgage in the first place. But the benefits don’t stop there. You’ll also qualify for better interest rates, says credit reference provider Equifax.

The better your credit rating, the more likely you are to be offered better introductory deals at more attractive interest rates.

Because credit rating is just one factor used in judging your mortgage application, it’s impossible to say just how much of an impact it will have, but any bad credit could have a big impact on your chances with most mortgage lenders.

What else do mortgage lenders use when deciding whether to lend?

Mortgage companies make their decisions on a range of factors.While credit score is important, it’s not the only thing they’ll consider.

A current relationship with a mortgage provider, equity in your home and size of deposit are all considerations for mortgage lenders. It also depends on the mortgage company’s appetite for risk, with some more likely than others to nod your application through or refuse it.

Mortgage companies are authorised and regulated by the Financial Conduct Authority, and have to meet strict lending standards.

What can I do to improve my credit score?

If you’re planning on buying a house and applying for a mortgage anytime soon, then you should check out your credit score as soon as you can. You can identify any credit issues, and take care of them to improve your rating.

But that’s not all. There are loads of things you can do to improve your credit score, including:

Registering on the electoral roll
Paying off all debts
Not applying for new credit
Close unused credit card accounts
Challenge any incorrect

You can find loads more tips on getting a mortgage in our detailed blog.

Need a mortgage?

At Simon Blyth, we work with a range of trusted mortgage brokers from the Mortgage Advice Bureau, who have access to over 90 lenders. They’ll work to understand your situation, circumstances and score to help find you a suitable mortgage product.