What credit score do you need to get a mortgage?

Want to buy a home? You’re probably wondering if you need a certain credit score to apply.

Well, the straightforward answer is that there isn’t a straightforward answer, but read on to see what you can do.

A mortgage decision is a complicated process because it is such a significant amount of money to borrow, spread over a long period of time, lenders will formulate their decision using a lot more detail than simply going off one credit score.

There are three main credit agencies that score you (Experian, Transunion and Equifax, see which lender uses who), each with different scores (and criteria). On top of that, mortgage providers will have their own lending criteria and set of requirements that need to be fulfilled before being considered for a mortgage. 

What do mortgage lenders look for in your credit report?

This varies wildly from lender to lender. Whilst most would be put off by a CCJ for example, there are lenders who won’t be. 

Here are some of the things they may want to know:

● How much money you want to borrow

● How much you've saved as a deposit (this will increase the equity of the house, which is the difference between the value of the house and the amount you owe)

● Your employment status and income

● Your outgoings

● Any existing debt, and how much of your available credit you are using

● And, yes, your credit report and if you have missed any payments on existing creditors

So a high credit score with one agency might not be right for a particular mortgage broker, whereas a lower score with another agency might be suitable for another. 

Remember they are looking for evidence that you are reliable and trustworthy borrower, which a credit report will showcase, but also that you can actually afford the mortgage, which your report will not. Your credit score is simply a part of the jigsaw lenders create to figure out whether to offer you a mortgage or not, albeit an important one.

Improving your credit score

That said it goes without saying that the better your credit score, the better your chances are of securing the mortgage decision you want. So there are still plenty of things you can do to improve the outlook of you being accepted for a mortgage and improve your credit rating in the process:

● Make sure you are registered on the electoral roll, as it is “ALMOST impossible to get a mortgage without it” according to Money Saving Expert.

● Check your credit score with all three major agencies; Experian, Equifax (formerly Noddle) and Transunion (formerly Callcredit). Find a mistake? Correct it.

● Don’t apply for any other form of credit at least three months before applying for your mortgage.

● Make sure your credit utilisation is at a healthy level.

● Check the times on your report. If you have defaults or CCJs they will be wiped off after six years, so delay any application till then.

Improving your credit score could also mean you may be eligible for a cheaper mortgage rate in the future. Your credit score will not just influence the decision, but also the amount of interest you pay. 

Read six factors that can affect your mortgage application.