Do I Need a High Credit Score for a Mortgage? 9 Proven Tips to Boost Your Chances

Getting a mortgage often hinges on your credit score, but how high does it need to be? This guide covers everything you need to know about mortgage credit score requirements, what affects your eligibility, and 9 proven tips to boost your chances. We also address common concerns like whether you can get a mortgage with a low score and how to build your credit from scratch. Implement these strategies to strengthen your financial profile and increase your mortgage approval odds.

Disclaimer: The information provided in this article is intended for general guidance and informational purposes only. It does not constitute personal financial advice. For tailored recommendations based on your circumstances, please contact a regulated mortgage advisor like Three Keys Mortgages.

Do I Need a High Credit Score for a Mortgage?

In the UK, there isn’t a universal minimum credit score required for mortgages. Lenders evaluate applications based on a range of factors, including credit score, deposit size, income, and employment stability. While having a higher score (typically above 700 with Experian) improves your chances of securing better rates, a lower score doesn’t automatically disqualify you from getting a mortgage.

Note: Each lender may have its specific criteria. If you are unsure about your situation, speaking with a regulated advisor at Three Keys Mortgages can help clarify your options and guide you through the process.

Credit Score Bands by Agency:

1. Experian:

   • Very Poor: 0-560

   • Poor: 561-720

   • Fair: 721-880

   • Good: 881-960

   • Excellent: 961-999

2. Equifax:

   • Very Poor: 0-279

   • Poor: 280-379

   • Fair: 380-419

   • Good: 420-465

   • Excellent: 466-700.

3. TransUnion:

   • Very Poor: 0-550

   • Poor: 551-565

   • Fair: 566-603

   • Good: 604-627

   • Excellent: 628-710.

Even if your credit score falls in a lower band, you can still apply for a mortgage with the right strategies and a larger deposit. Read on to discover how to improve your credit score before applying.

For more insights on managing your credit profile, visit our Comprehensive Guide: Different Types of Mortgage Rates Explained.

9 Proven Tips to Boost Your Credit Score for a Mortgage

1. Check and Correct Your Credit Report

• Action: Access your credit report from Experian, Equifax, and TransUnion. Look for any incorrect addresses, unrecognised accounts, or late payments.

• Impact: Fixing mistakes can quickly improve your score and make you a stronger mortgage applicant.

Disclaimer: Checking your credit report won’t impact your credit score. Use this as an opportunity to ensure your details are accurate.

2. Register on the Electoral Roll

• Benefit: Adds up to 50 points and helps lenders verify your identity.

• How to Register: Visit the UK Government’s Electoral Registration page. Register to vote online

3. Manage Your Credit Utilisation Ratio

• Ideal Ratio: Keep it below 30% of your total credit limit.

• Tip: If your limit is £2,000, use no more than £600. Spread balances across multiple cards or request a credit limit increase without increasing your spending.
  

• Important: If you are struggling with debt, seek professional advice from a regulated debt counsellor before making any decisions.

4. Apply for a Notice of Disassociation

• What It Does: Removes financial links to people, such as ex-partners, who may have poor credit.

• Why: Their poor financial behaviour can reduce your credit score.

5. Limit New Credit Applications

• Why: Each application results in a “hard inquiry,” which can temporarily lower your score.

• Advice: Use soft search tools to check eligibility without affecting your score.

6. Close Unused Credit Accounts Wisely

• Action: Close redundant accounts but keep your oldest accounts active to maintain a longer credit history.

• Impact: Maintains a longer credit history, which lenders favour.

7. Use Credit-Building Cards Responsibly

• Strategy: Make small purchases and pay off the balance in full each month.

• Outcome: Demonstrates responsible credit use without accruing high-interest debt.

Note: This tip may not be suitable for everyone. Credit cards can lead to debt accumulation if not managed properly. Always consider your spending habits before applying.

8. Set Up Direct Debits for Bills

• Why: Missed payments can stay on your report for up to six years.

• Tip: Use direct debits to ensure on-time payments for utilities and credit cards.

9. Check for and Protect Against Identity Fraud

• How to Monitor: Use free monitoring tools to track your credit profile.

• Action: Report fraudulent activities immediately to prevent further damage.

How Credit Scores Affect Your Mortgage Rates

Lenders use credit scores as a primary factor in deciding your mortgage rate. The higher your credit score, the lower your perceived risk to lenders. Consequently, a higher score will often secure lower interest rates, potentially saving you thousands over the life of your mortgage.

• Excellent Credit (700+ with Experian): Often qualifies for the lowest available rates, resulting in smaller monthly payments.

• Good Credit (620-699): Still eligible for standard rates, but slightly higher than the lowest available.

• Poor Credit (Below 620): Likely to face high interest rates or limited product options.

Tip: Use Mortgage Calculators to Compare Rates

Our regulated advisors can provide you with tailored guidance to help you identify the best mortgage products based on your unique credit profile. Get in touch today to find out how we can make your home-buying journey smoother.

How to Build Credit from Scratch

If you don’t have a credit history or have just moved to the UK, building credit can seem challenging. Follow these steps to start building a positive credit profile:

1. Open a Basic Bank Account: Choose one that allows for small overdrafts and ensure you manage it responsibly.

2. Get a Credit Builder Card: Use it for regular, small purchases and pay it off in full each month.

3. Apply for Store Credit: Store cards can be easier to get approved for. Use them wisely and repay on time.

4. Avoid Payday Loans: Short-term, high-interest loans can damage your creditworthiness if not managed properly.

FAQ

Q: Can I get a mortgage with a low credit score?

• Yes, but you’ll need access to specialist lenders and may need a larger deposit. Expect higher interest rates compared to those with better scores.

Q: Does checking my credit report harm my score?

• No, checking your report is a “soft inquiry” and won’t affect your score. It’s a good practice to review it regularly to spot errors.

Q: How long does it take to see improvements in my credit score?

• Minor changes, like registering to vote, can show results in weeks, but substantial improvements may take 3-6 months depending on the severity of the issues.

Q: Should I close old credit accounts?

• No, keeping your oldest accounts open helps maintain a longer credit history, which benefits your score.

Q: Is it better to have no credit or bad credit?

• Having no credit makes it difficult for lenders to assess risk, while bad credit can lead to rejection. Start by building a positive credit history with a small credit card.

Ready to Improve Your Credit and Secure a Better Mortgage Deal?

At Three Keys Mortgages, we specialise in guiding buyers through the mortgage process, whether you’re a first-time buyer or looking to remortgage. Our experienced advisors can help you assess your credit situation and find mortgage products that match your needs. For personalised advice and support, contact us today to explore your options and make your home-buying journey a success!