Mortgages are quite intimidating if you don’t know much about them. They can seem complicated and difficult to understand, but a strong understanding is very important if you begin applying for one.

Each mortgage lender is different, so if you want to know the answer to the question “what credit score do I need for a mortgage”, the answer may be more complex than you think. Mortgage lenders will analyse your credit score for mortgage applications, and they all interpret the results in different ways.

So many factors impact your credit score that it can become difficult when you begin to ask the question, “what credit score do I need for a mortgage?”. MoneyBright is here to explain everything you need to know about credit scores and mortgages, including:

  • What is a credit score?
  • What is considered a good credit score?
  • What is the minimum credit score I need to get a mortgage?
  • Can you get a mortgage with a fair credit score?
  • Can you get a mortgage with a bad credit score?
  • How many years of credit do I need for a mortgage?
  • If I have a low credit score, will I need a large income for a mortgage?
  • Are there any mortgage providers that don’t use a credit score?
  • Why should I check my credit score before applying for a mortgage?
  • How can I reduce my chances of being rejected for a mortgage?

What Is A Credit Score?

Firstly, it’s key to get to grips with the basics. A credit score is a report and a rating of your reliability regarding borrowing money. This is from the perspective of a lender, and the report usually holds information such as your previous addresses, missed payments, current credit dependencies and more.

Your credit score and report will change over the years as you take on more credit, pay it off and move house. The way it is interpreted will depend on each lender, with some elements of a report being taken into more consideration by one lender, than another.

What Is Considered A Good Credit Score?

A good credit score depends on how you measure it, as different providers have different ways of standardising it. However, overall a good credit score is as close to the maximum number as possible with little to no negative marks on the report.

What Is The Minimum Credit Score I Need To Get A Mortgage?

When you bring a mortgage and a credit score together, things become slightly more complex. There aren’t set standards that need to be met for a mortgage, especially as lenders tend to be vastly different in the way they use and interpret credit scores.

As a result, there isn’t a set number that will make you eligible, and many other factors will be taken into consideration when assessing your application for a mortgage. However, a general rule is a higher credit score and a cleaner report means you’re more likely to not be rejected based on your credit score.

Lisa Best, of Propertyable adds, “Lenders often have their own criteria when assessing affordability. While it a great to have a good credit score, it is more important to have a good credit history and good spending habits. Things like not missing payments and not having a high ratio of credit to income. It is also wise not to take any new credit such as credit cards and car finance if you are about to apply for a mortgage.”

Can You Get A Mortgage With A Fair Credit Score?

Yes, you’ll be able to get a mortgage with a fair credit score. Mortgage lenders understand that not everyone can have a high credit rating, so have different criteria that can be met with varying credit scores instead.

These criteria will then dictate what type of rates you can get and the length of the mortgage itself.

Can You Get A Mortgage With A Bad Credit Score?

A bad credit score doesn’t mean you can’t a mortgage, but the options you have and the deals you’re offered will be restricted in comparison to what you would have received if you applied with a good credit score.

Mortgage lenders will be more hesitant to lend to someone who does not have a good history of repaying their debts, and as a result, will require more of a safety net if they do lend to you. This can be in the form of higher rates, harsher repayment fines and generally lower loan amounts.

How Many Years Of Credit Do I Need For A Mortgage?

Most mortgage lenders will look back on the last six years of your credit history when assessing your mortgage application.

There aren’t a minimum amount of years needed for a mortgage, but if you don’t have those six years to assess it can have a negative impact. However, if you’re young with a great credit score, you may be more successful than someone older with a bad credit score.

If I Have A Low Credit Score, Will I Need A Large Income To Get A Mortgage?

A low credit score doesn’t always mean you need to have a large income to compensate for it, however, it doesn’t hurt. The financial stability that is offered by a larger income can be a sign to mortgage lenders that you’re able to handle the mortgage payments despite having a ‘bad history in your credit report.

This is especially true if your bad credit issues were from a lengthy amount of time ago, as your income and currently positive trend of credit will speak more volumes.

Are There Any Mortgage Providers That Don’t Use A Credit Score?

Some mortgage providers will accept an application regardless of the credit score, but if you don’t want your credit score to be taken into account, you’ll need to go to a specialist lender. From here, they’ll be able to advise you on the types of mortgages available to you and how to improve your application to boost your chances of being accepted.

Why Should I Check My Credit Score Before Applying For A Mortgage?

Understanding what mortgage lenders will see when you apply is an important step to being able to make the best application possible. You can do this by checking your credit report to see if any issues need amending. You can check it using free tools such as Experian and ClearScore.

There is a chance there could be an error that will impact if you are accepted or not, at which point you will need to dispute it. You may also be asked by mortgage lenders if you have any credit issues they need to be aware of, which you’ll only be able to confirm if you have checked your credit score before you begin applying for a mortgage.

How Can I Reduce My Chances Of Being Rejected For A Mortgage?

Over the years you should always focus on trying to build a good credit score, but there are steps you can take to boost it before applying for a mortgage. Avoiding hard credit checks on your report is a good start, and you should try to avoid this at least a year before you begin applying for a mortgage.

Also, consider keeping your credit use as low as possible to show that you can handle your credit and you don’t act irresponsibly. Also, keep your addresses minimal and your credit organised, these are two elements that might not make a huge difference overall but could be the deciding factor for mortgage lenders.

We know what we’re talking about! We have plenty of advice and tips for sorting out your finances in 2022. Whether you’re looking for personal finance tricks, travel tips or saving and investing advice, we’ve got it all here for you.

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