What Credit Score Do I Need For a Mortgage?

This is arguably one of the most frequent questions we are asked here at UK Moneyman. Of course when it comes to applying for any type of finance, your credit score and credit history is crucial in determining an outcome.

So what is the best credit score to have ahead of your mortgage? Well, if you were to research online, you may find sites telling you that certain numbers are good and certain numbers are bad.

Often on sites such as Experian, Equifax & TransUnion, you will find yourself with a general guide as to what is considered good enough to obtain a mortgage.

These are simply guides though, and without proper mortgage advice, it can be difficult to know for sure. Despite these guides, each mortgage lender has its own strict mortgage criteria anyway. What is considered good overall, may not necessarily be right for a mortgage.

Conversely, a score that may generally be considered weak, depending on various factors, may be sufficient to take out a mortgage, albeit with higher rates of interest. Generally speaking, anything over 900 is considered to be a good credit score.

You are likely to access a wider range of mortgage deals in having a credit score like this. That being said, there are some instances where you may need even as high as 950+, due to a mortgage lenders strict mortgage criteria.

It is situations like this where speaking to a qualified mortgage advisor will be able to help. They will be able to review your credit score, your credit history, what you are looking to achieve, your income and more, to find a lender that is suitable for your case.

Booking a free mortgage appointment allows you to speak with a member of the team at a mortgage broker, at a time that is convenient to you and your day-to-day life. They’ll review your case and get you matched up with the best mortgage deal for your circumstances.

Is it possible to get a mortgage with a low credit score?

Again, this is a question we hear often. Depending on your circumstances, yes this may be possible. Everyone’s situation is unique to them, so it is entirely possible for one person to get a mortgage with a lower credit score, whilst another applicant may not be so lucky.

Young applicant with low credit score

One of the instances where you may have a lower credit score but possibly be able to achieve mortgage success, is if you are a younger applicant.

More commonly with first time buyers, we see that a younger applicant may simply just not have much of a credit score to go off. This does not mean they are bad with their money, have had any missed payments or defaults.

It may just be that they haven’t had any credit before, therefore haven’t had a chance to build up their score. In situations like this, a prospective applicant may believe that there is no chance of obtaining a mortgage due to this.

The truth is, that whilst not every mortgage lender will work with this, so long as you can pass affordability checks, there may be some lenders who will accept this type of applicant.

Speak to a trusted and experienced mortgage broker today, and we will see if you match up with a mortgage lenders criteria for a product.

Mortgage with a CCJ or Default

If you have missed any monthly payments on anything, for a particular length of time, a creditor may issue you a default notice. This is not good for your credit score, causing it to lower, which in turn could limit the amount you are able to borrow or even stop you from getting a mortgage altogether.

To learn more about this, see our article Can you get a mortgage with a default?

Further to being issued a default notice, if you still fail to make back any payments, you may be issued a County Court Judgement, often shortened to CCJ. This is a last resort option for creditors, as they will try to chase the debt initially and perhaps work on an agreement to be paid back.

So, can you get a mortgage with a CCJ? Well, having a CCJ to your name is usually bad news. Not only can it stop you from getting a mortgage, you may find it difficult to even get a credit card or open up a bank account.

A CCJ will stay on your credit file for 6 years, even if you are able to settle it. You can protest a CCJ if you feel it has been wrongly put on you, but this can be a challenge and it may just be worth paying it off to prevent your credit score from being damaged further.

In both cases, whether it’s a getting a mortgage with a default or getting a mortgage with a CCJ, though incredibly difficult to work with, in some cases it can be possible. Some mortgage lenders will want you to “satisfy” your CCJ, by paying it back.

Doing this may also allow for you to have more options when it comes to being matched up with a mortgage lender. This isn’t always a necessity for some lenders, however. Other factors they will look at, are the size of the CCJ and the date it was issued.

It is entirely possible for someone with a smaller, 4 or 5 year old CCJ to still obtain a mortgage (although likely with difficulty), even if they have yet to satisfy that CCJ.

As is the case with most areas of the mortgage world, this once again depends on circumstance and mortgage lender criteria. It is always worth speaking to a qualified mortgage broker prior to making any moves on a mortgage with a CCJ to your name.

Remortgage with bad credit

If you are already a homeowner, you may be looking to remortgage your property. This is typically a straightforward enough process, unless you have bad credit. It is possible to remortgage with bad credit, but will depend on your situation.

Even though it is your home that you are wanting to remortgage, if you have bad credit, you may find that you are, worst case scenario, unable to do this. Luckily, there may be some specialist mortgage lenders who will allow you to remortgage with bad credit.

It is always worth your time speaking to a specialist mortgage broker in order to make the most out of your remortgage journey, as one of our mortgage advisors may be able to find you a suitable remortgage option for you.

Book your free remortgage review today and benefit from expert remortgage advice.

How does a low credit score impact interest rates?

Mortgage applicants with a lower credit score, as touched upon above, may have a more difficult time applying for a mortgage than someone with a higher credit score might have. It doesn’t always guarantee a no, but this is absolutely a possibility.

For those who are perhaps younger applicants like we mentioned earlier, whilst their score may be lower, their interest rates may not necessarily be higher as there is no adverse credit on their credit file.

On the other hand, if you have adverse credit, such as a default or CCJ, you will likely be incurring higher interest rates.

Though normally with a mortgage, you could put down a larger deposit to reduce interest rates or a mortgage term, with adverse credit you’ll typically be asked for a larger deposit anyway, so this wouldn’t affect your interest rates.

Ways to improve your credit score

In order to better your chances of achieving mortgage success, it is worth taking the time to ensure that your credit score is in the best possible position, prior to making an initial enquiry.

The first and easiest step we would suggest, is to make sure your addresses are up to date. Register yourself on the electoral roll at your current address, as this will definitely give it a boost. This applies even if you still live with parents or are a student in accomodation.

Closing down any unused or old credit accounts will also help, especially if you have a lot of them. Having a few isn’t necessarily a bad thing though. You should also look to sever any ties to any friends, family members or exes that you had any joint finances with at any point in the past.

Further to that, don’t max out any of your cards (keep usage low) and make sure that you always make payments to any creditors you owe, on time. Making sure your credit report has no issues or fraudulent activity is also useful.

For any more tips on how to improve your credit score, please feel free to get booked in for a free mortgage appointment today. One of our dedicated mortgage advisors will advise on how best to maximise your chances of getting a mortgage in the future.