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Can I get a mortgage if I have no credit score?

How to get a mortgage with little or no credit history.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 22nd August 2019 *

Getting a mortgage with no credit history (thin credit files)

Whether you’ve recently become resident in the UK, returned from an extensive period living as an expatriate abroad or have always lived with your parents; trying to secure a mortgage can prove a difficult task.

All lenders will use your personal credit rating in order to help them assess how good (or bad) you are at borrowing money. The information from a credit report offers evidence of your reliability to repay debt on time and as agreed. A report offering little or no credit history means lenders have no information about past behaviour to assist when making a decision.

The good news is there are experts that we work with who can help you get a mortgage if you have no credit history. Once you have read through this article, get in touch and we can arrange for you to speak directly with them.

In this article we will look at the following key areas:

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In what circumstances would somebody have no credit history?

Believe it or not having little or no credit history can be just as consequential to any prospective credit application than one with a bad credit history. This may seem slightly unfair as somebody who has never had credit in the UK before can be assessed similarly to someone who may have defaulted on a previous loan.

Unfortunately, if a lender is unable to evaluate your ability as a borrower due to a lack of historical evidence they have very little choice but to assess the application as a high-risk case.

Here’s a list of reasons why somebody would have a low credit rating in the UK:

  • Not registered on the electoral roll in the UK
  • No permanent or fixed address in the UK
  • No employment history in the UK
  • UK credit history is too old (no records within last six years)
  • Don’t have a UK bank account
  • No utility bills in your own name
  • Living with parents
  • Under-18 years old
  • From a wealthy background and never required credit before
  • Recently moved to the UK
  • Lived abroad for a number of years and recently returned to the UK
  • Just released from prison following criminal conviction

Of the above, electoral roll registration is a pretty vital component of someone’s credit history. It provides confirmation of your UK address, identification and British citizenship. It can be more difficult to ascertain a mortgage in the UK if you’re not on the electoral register.

Adding your details to the register is quite simple and can be done online or via your local council office for free. It usually takes a few weeks for your details to be updated on the official records. If you change address you must update your new details onto the system as soon as possible.

Let’s take a closer look at how the credit rating system works and what steps can be taken to ensure you’re successful attaining a mortgage despite having no credit history.

What is a credit search?

A credit search is a review, conducted by a company, with the specific aim of gaining a clear understanding of your financial behaviour up to that point. Although your consent is not mandatory the company must have a legitimate reason for the credit search; a lender with whom you’ve applied for credit or, perhaps, a prospective employer as part of their recruitment process.

There are two types of credit search (or check): a soft check and a hard check.

A soft check is akin to a ‘sneak peak’ at your financial position without going into the full details. A hard check, as the name suggests, is a much more robust, complete, search.

The crucial difference between the two is a soft check search will not be visible to other companies whereas a hard check is. Too many hard check searches can adversely affect your credit score as they remain on your report for years, although having them on there doesn't usually impact your credit score after six months.

Any credit search conducted by you is counted as a soft check and, therefore, has no affect on your credit score. You can check your report as often as you like without a company knowing about it.

What’s the difference between a credit report and a credit score?

A credit report is a complete record detailing your financial activity – how you’ve borrowed money and whether you’ve paid it back as agreed. It has three parts:

  • Personal information (address history, electoral roll registration)
  • Credit account history
  • Payment history

Based on the information within a credit report a credit score is given which can be used to summarise how favourable any new credit application would be received by a lender.  Both your credit report and credit score can be compiled by three separate credit reference agencies – Equifax, CallCredit and Experian.

This is where things can get confusing because, in effect, we all have three separate credit scores – one from each agency. Equifax’s score is out of 700, CallCredit is 710 and Experian is 999. To keep it simple, just remember the better the report the higher the credit score.

A lender will usually use one of the reference agencies, but some crosscheck scores across agencies. However, it’s important to note that the credit score from the agency is used purely as a reference point. Each lender will use its own internal lending criteria to reach a decision. Some will use a scoring system others will base the decision on the information from its credit search.

In summary, rather than your credit score and/or your report, it is the strength of your overall application with the lender that will decide whether you can get a mortgage with little or no credit history.

To find out more about how lenders conduct their credit checks make an enquiry and an expert can get in touch to give you some more details.

Can I get a mortgage with no credit history?

Get ready for some good news – yes, it’s possible to get a mortgage with no credit history. As mentioned in the previous section, it is important to remember that lenders form their own conclusions by using either a credit check or a score purely for reference purposes.

They also look at an application as a whole including someone’s disposable income after outgoings, employment status, overall wealth (including wider family), amongst other things.

At Online Mortgage Advisor we work with a number of specialist advisers with a focus on this particular area. They will be able to guide you on aspects of affordability, deposit requirements and what terms are available.

Most mainstream lenders would shy away from such applications, however, there are a few who would look more favourably and the advisers we work with will know who they are. If you get in touch with us we will be able to arrange a meeting between yourself and these advisers.

Do I need a credit card to get a mortgage?

No, not at all. You don’t need a loan either. In fact, if you’re looking for a property and know in advance you will need a mortgage it can be advisable avoid applying for any other lines of credit in the few months beforehand.

Any new credit applications will require a hard check by the lender. These will remain on your credit report (usually for six months) and could reduce your overall score, affecting the outcome of your mortgage application.

Speak to a qualified expert for advice before making any decisions.

How can I build my credit rating?

If you’ve had a mortgage application declined because you have little or no credit history in the UK don’t lose hope – there’s lots of things you can start doing straight away to build your credit score.

Register on the electoral roll

As mentioned above, make sure you are registered to vote with all your address and personal details correct and up to date. Without this any application for credit will likely fall at the first hurdle.

UK Bank Account

If you’ve recently moved to the UK, returned from living abroad or never had one before you need to open a UK bank account in your own name. It needs to be an active account with a regular flow of financial transactions. The more active the better (without becoming overdrawn).

Utility bills

Regular utility bill payments count towards your overall credit score. If you don’t have any utility bills in your name then take steps to do this and link the payments to your UK bank account.

Mobile phone contract

In effect when you agree a new mobile phone contract you are entering into a credit agreement with a lender. The price of the phone and the rental fees are spread across the term of the contract. So, by keeping up to date with your monthly payments you are adding credence to your ability as a borrower.

UK Credit Accounts

One of the simplest and swiftest ways to build your credit history is by taking out some form of short-term lending such as a credit card from a bank or building society. Use it to pay for everyday items such as food and petrol then pay the balance each month. All these payments will count positively towards your credit score.

Store cards, offered by most major high street brands, are a bespoke type of credit card that would also assist your credit score if you shop regularly at one particular outlet.

If your credit rating is also hindering your chances of getting a credit card there are lenders who offer high interest credit rebuilding cards with lower limits to control your spending. As long as you pay your balance each month the high interest won’t be a factor.

Do not use payday loans

Payday loans usually stay on your credit record for six years and will seriously hinder your chances of obtaining a mortgage whilst it is evident on your credit report. For more information look at our article on Payday Loans.

What mortgage can I afford to get with little or no credit history?

As mentioned above, all lenders will use their own assessment criteria when reviewing a mortgage application. It stands to reason that where there is more risk involved when applying for a mortgage with no credit history. As a result a lender may be more stringent on the terms they are willing to offer.

So, for example, if you’re in full-time employment most lenders will use an income multiple of 4x income, some will use 5x income and a few will use 6x. However, with any added risk involved – like no credit history - the number of lenders willing to offer a higher income multiple reduces further.

What deposit would I need?

With a typical residential mortgage most lenders can offer a loan to value of 80%, some can offer 85% and a few will consider 95%. As with the affordability criteria, the number of lenders that may offer a higher loan to value will reduce if there is a higher risk involved due to the lack of credit history.

Understanding all aspects of affordability and deposit requirements can be quite in-depth. It’s important you speak to an expert to discuss your own personal situation.

How do I get a mortgage with no credit history?

Given than some lenders offer unfavourable rates to borrowers with no credit history, and other providers turn them away outright, a specialist lender may be required if either of these scenarios apples to you.

Going to the wrong lender when you have credit issues can result in paying over the odds in interest or being rejected for a mortgage, while making too many applications can further impact on your credit report.

Applying for your mortgage through a whole-of-market broker, like the ones we work with, can help you avoid these pitfalls. They can introduce you to the lender best positioned to help a customer with you needs, circumstances and credit profile.

Speak to a specialist bad credit mortgages expert

Call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry. Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t change a fee and there’s no obligation or marks on your credit rating.

Updated: 22nd August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Find out more about how we help people get mortgages with bad credit.

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