What credit score do you need for a mortgage?

What credit score is needed to buy a house? 

In general, being rated good, very good or excellent on each CRA scale, will improve your chances of being approved for a mortgage.  

If you have a ‘fair’ credit score, you may still be able to get a mortgage. However you will probably have fewer options available to you, and your mortgage might cost more in interest. 

What else do mortgage lenders look at when you apply for a mortgage?  

Your credit score is just one factor mortgage lenders look at when deciding whether to lend to you. Others include: 

• Your income, outgoings and affordability 

• Any individual voluntary arrangements, county court judgements (CCJs) or bankruptcy 

• Your credit utilisation ratio – this is how much of your available credit you are currently using 

• The loan-to-value of your mortgage – this is the proportion of the property value you want to borrow  

• Your deposit size 

Does a mortgage in principle affect credit score? 

Most borrowers get a mortgage in principle (or MIP) before applying for a mortgage. A MIP is when a mortgage provider indicates that it would be willing to lend you a certain amount of money to buy a property.  

Most lenders carry out a ‘soft’ credit check when you apply for a MIP. A soft credit check won’t leave a visible mark on you credit file. A handful of lenders carry out a ‘hard’ credit check when you apply for a MIP.  

This type of credit check will leave a mark on your credit file. Too many hard checks in a short amount of time can have a negative effect on your credit score. 

Does your credit score affect your mortgage rate? 

Having a good credit score can mean you are offered a better interest rate on your mortgage. This is because the lender will be more confident that you will pay the money back. 

The size of your deposit will also affect the mortgage rate you are offered. The lower your loan-to-value (the proportion of the property value you borrow as a mortgage), the cheaper your mortgage will generally be. 

Will having a mortgage affect my credit score? 

Once you have a mortgage and are making regular payments on time, your credit score could go up. 

This is because your mortgage lender will report your payment history to the CRAs. 

Missed mortgage payments or arrears will have a negative effect on your credit score. 

Can you get a mortgage with bad credit? 

Yes. Some lenders offer mortgages designed for people with bad credit.  

These are called ‘sub-prime’ or ‘bad credit’ mortgages and they usually have higher interest rates and/or require a bigger deposit than mainstream mortgages.  

How can I improve my credit score for a mortgage? 

• Make debt payments and household bill payments on time 

• Be registered on the electoral roll at your current address 

• Pay down your debts and close any accounts you no longer use 

• Check your credit report(s) for mistakes and signs of fraud 

• Try not to apply for other credit in the six months before your mortgage application 

You can read about quick ways to improve your credit score here.