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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: 27th March 2020 *

There are many reasons why somebody might have no credit score. Perhaps you recently became a resident in the UK, have just returned from an extensive period living as an expatriate abroad or have always lived with your parents.

Getting a mortgage under any of these circumstances can be challenging - if your credit history is limited, the mortgage provider might feel they are taking on a big risk since they can't determine whether you're a responsible borrower.

But the good news is that there are specialist lenders who are willing to offer mortgages to customers with credit score at all, subject to other criteria.

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

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Can I get a mortgage with no credit history?

Yes! It’s possible to get a mortgage with no credit history. As we'll go on to discuss in-depth, it is important to keep in mind that lenders form their own conclusions by using either a credit check or a score purely for reference purposes.

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

We work with specialist advisers who focus on this particular area. They will be able to guide you on aspects of affordability, deposit requirements and what terms are available.

Why you might have no credit history

No credit history means having nothing on your report and/or you haven’t borrowed money in the last seven years.

This may seem a little unfair to someone who has stayed within their financial boundaries, but having a ‘thin file’, or little to no credit history, doesn’t show mortgage lenders that you’re successfully able to manage debts. To offset this risk, they need evidence.

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 the last six years)
  • No 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 a 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.

Some lenders will want you to have a certain credit score, a numerical value assigned to your financial conduct by the UK's three main credit reference agencies: CheckmyfileUKCreditRatings and Experian.

Mortgage providers who base their lending decision on credit scores can vary dramatically in terms of what they will and won't accept, but keep in mind that there are also lenders who don't use credit scores at all.

These lenders simply search your credit report for the presence of adverse. If you have bad credit, this could mean that a specialist lender is called for. They have the flexibility to take the age, severity and the reason for your credit issues into account when assessing your application.

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 basically a ‘sneak peek’ into 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 effect 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 per the terms. 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.

We all have three separate credit scores, one from each agency. Equifax’s score is out of 700, CallCredit is 710 and Experian rates you out of 999. The higher the credit score, the better your report in the eyes of some lenders, but others don't use credit scores at all.

A mortgage lender will usually use one of the reference agencies, but some compare scores across agencies. 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.

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 are 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.

Open a 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 to 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.

Avoid 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 size mortgage can I expect to get with little or no credit history?

As mentioned above, all lenders will use their own assessment criteria when reviewing a mortgage application. When there is more risk involved in a mortgage application due to the lack of traceable credit history, 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 4.5x 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.

How do I get a mortgage with no credit history?

Given that 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 applies 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 bad credit mortgage 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 your needs, circumstances and credit profile.

Speak to a bad credit mortgage broker

If you're looking for a mortgage but have no credit history, it's important to seek specialist advice to ensure you end up with the best deal for your needs and circumstances.

Call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry and we'll introduce you to an expert bad credit mortgage broker for a free, no-obligation chat today.

Updated: 27th March 2020
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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.