What Is the Minimum Credit Score for Mortgages in the UK?

Most mortgage lenders in the UK use Experian, Equifax, ClearScore or TransUnion to check your credit history when you apply for a loan. They don’t however solely rely on the scores attributed to you by these credit reference agencies. The lender uses the information that credit reference agencies hold on you to perform a credit check and assign you a credit score they use for their own records. Each lender has their own threshold for what they consider to be an acceptable score. 

More About Credit Reference Agency Credit Scores 

You can use credit reference agencies and the scores they give you to get an idea of the overall condition of your credit profile. Each credit reference agency has its own scoring model, so your score may be slightly different depending on which one is used. For example, a “good” score on Experian may fall between 881 and 960, while Equifax considers a score between 420 and 465 to be “good.” It’s a good idea to check your credit report with all 3 agencies, as they may contain different information. Note that if there are any mistakes or outdated information on your report, this could affect your score, so it’s worth following up with agency to have an issues like this corrected.

This is one of the most common questions that people have when applying for a mortgage. Many first-time buyers and even some previous homeowners assume that they need a high credit score to apply for and get a mortgage, but the fact is that there are no minimum credit score requirements for securing a mortgage in the UK. This is because different lenders have different criteria.

Most lenders use your credit score as part of their evaluation when considering giving you a mortgage, but they also take into account other factors, such as your income, employment status and the amount of money you’ve saved for a deposit. 

Therefore, it's possible to get a mortgage with a low credit score, however the lower your score, the smaller the pool of lenders available to you and the more limited your options.  

You might find you’re offered a mortgage with a shorter term or higher fees compared to those available to borrowers with good or excellent credit scores. In some cases, a low credit score could mean you’re only eligible for a variable rate mortgage, which may expose you to higher payments if interest rates rise. 

There are even some lenders that don’t assign a credit score at all – many of these are subprime mortgage lenders. These lenders don’t credit check in the traditional way, instead they underwrite applications on a case-by-case basis, allowing them to learn about the circumstances that led to your adverse credit event(s). These lenders tend to offer higher interest rates and require larger deposits as a way to mitigate the perceived risk. 

That said, having a good or excellent credit score will certainly improve your chances of securing a better deal as you’ll have access to more lenders and products.

If you have a history of not meeting repayment obligations in the past and have a particularly bad credit score due to records such as CCJs, then you’ll very likely need a subprime lender.

These lenders often require a higher deposit and charge higher interest rates and fees, but they're much more willing to work with people who have poor credit scores.

This means that, whilst having adverse credit or a bad credit score can limit your options for the type of mortgage you can get, it doesn't necessarily mean that you won't be able to find a suitable lender.

To improve your chances of securing a mortgage, there are a few things you can do:

• Improve your credit score before applying - if you’re able to wait to take out a mortgage, then do. Use the time to build up your credit score as this will give you access to more and better deals
• Try to save as much money as possible for a deposit - the larger the deposit you're able to save, the better your chances of securing a good deal. Lenders look more favourably upon applications with lower LTVs (loan-to-value) as they involve less risk from the lender’s point of view
• Make sure all your financial documents are in order - lenders need to ensure that you can afford the loan payments, so make sure you have everything they’ll need such as pay stubs, bank statements and tax documents
• Pay off any debts on time and monitor your credit report to make sure everything is accurate - this includes paying off all of your credit cards and overdrafts and settling defaults. If you can't repay all of your debts in full, try to settle as much as you can to reduce the amount of debt on your credit report
• Use an independent, specialist mortgage broker - different lenders have different requirements so it pays to use an independent mortgage broker who knows where to go for the kind of mortgage you need. At John Charcol, we have access to the whole market, so we can find you the lender and deal best suited to your situation. What’s more, a lot of subprime lenders only operate through intermediaries, so to access these you’ll need to use a broker
• Make sure your broker is aware of each of your income sources - this includes your salary, overtime pay, bonuses and any other benefits. Many lenders assess your income as a multiple of your salary, so if you're able to include all other sources of income on your application, this can help increase your chances of getting approved for a mortgage

By following these tips, you should be able to put yourself in the better position to get approved for a mortgage.

If you spot any errors on a credit report, you should contact the credit reference agency immediately to have it fixed. They will investigate and make sure that all the information is correct. If there are any errors, they will be updated or removed from your credit file so that lenders can get an accurate picture of your financial history.

You should also make sure to contact any lenders or creditors who may have reported incorrect information so they can update their records. This will help to ensure that your credit record is accurate and up to date.

If you have a low credit score, applying for a mortgage might seem daunting, but it’s not impossible.  

1. The first step is to obtain copies of your credit reports from the 3 main credit reference agencies: Experian, Equifax, and TransUnion. Review these reports carefully to ensure all information is accurate. If there are any errors or discrepancies, you should contact the relevant agency to have them corrected 
2. Once you've reviewed your reports, work on improving your score: settle outstanding debts, pay bills on time and avoid new credit applications. If possible, save for a larger deposit, as this will help offset the risk posed by a lower credit score 
3. Next, seek advice from a mortgage broker like John Charcol: we specialise in low credit score mortgages. Brokers have access to a range of lenders - including subprime mortgage lenders, who may be more willing to approve applicants with poor credit histories. With the help of a broker, you'll be able to identify lenders most likely to approve your application and get advice on how to strengthen your position 
4. When you're ready to apply, submit your mortgage application: include all necessary documentation, such as proof of income and bank statements. The broker will then negotiate on your behalf to secure the best possible deal

The best way to apply for a mortgage with any credit score - but especially a low one - is to go through an independent, specialist mortgage broker such as John Charcol. We have access to high street, building society and subprime lenders from across the market and are familiar with their criteria, which means we can find you the most suitable lender with the best deal available for your situation.

Contact us today on 0330 433 2927 to find out more.