What credit score do you need for a mortgage?

The higher your credit score, the better prospects you have of securing a mortgage with the best available interest rates. But exactly how high does your credit score need to be? There’s two reasons why the answer to this question is not as straightforward as we’d all like it to be.

First, there’s not one but three main credit reference agencies in the U.K – Experian, Equifax and TransUnion. Each agency uses different scoring systems and slightly different criteria when conducting mortgage credit checks. This means you could make a separate request for your credit score from all three agencies and they’d all be different. Which one is right? Well… all of them.

Here’s a simple outline of how they work in practise:

• Experian’s scoring range is between 0-999, with anything over 961 considered ‘excellent’ and anything ranging from 861-960 is ‘good’
• Equifax scores range from 0-1,000 with any score over 811 considered ‘excellent’ and between 671-810 is ‘very good’
• TransUnion scores range from 0-710 with anything over 628 ranked as ‘excellent’ and between 604-627 ‘good’

So, as you can see there really isn’t one simple ‘jackpot number’ you can land on that will give an automatic acceptance from a mortgage lender.

Second, regardless of how high (or low) it is, your credit score will not be the sole determining factor which decides whether your mortgage application is approved. In addition to your credit score, a mortgage lender will take a host of other considerations into account, such as:

• The size of your mortgage deposit
• Annual income and outgoings
• Employment status
• Amount of loan required / loan-to-value
• Existing debts

So, for example, you could apply for a mortgage with a lender who uses Experian for a credit reference and your score ranks as excellent but your disposable income is insufficient to meet the costs of the mortgage. On this basis the lender would likely decline the application due to concerns over affordability.

Alternatively, if you have a large deposit, no other debts, solid employment record and large disposable income but your credit score is low due to, say, some missed loan payments from a few years ago, there are lenders who could be willing to consider your mortgage application further.

What can you do to maintain a healthy credit score?

Your credit score provides a lender with a valuable snapshot of how good you are at managing your finances. It’s basically a reliability check to see how responsible you’ve been when borrowing money in the past (most credit reports stretch back six years, looking at loan repayments, credit card usage, mortgage payments and utility bills).

With this in mind, there’s a number of practical things you can do to ensure your credit history remains clear of any financial blips and improves your chances of qualifying for the best mortgage offers:

• Register your name on the electoral roll at your main address
• Reduce any existing debts down to a minimum where possible
• Keep up to date with any and all existing loan repayments
• Make sure any credit card payments are up to date and close any credit accounts you’re no longer using
• Resolve any civil disputes (parking fines etc) before the prospect of a county court judgement (CCJ) is issued
• If you live with a partner, ask them to follow these same guidelines to ensure their credit record also remains healthy

In addition to this list, if you’re thinking of applying for a mortgage at some point over the course of the next 6-12 months, try to avoid applying for any other major line of credit unless absolutely necessary. This avoids any prospective mortgage lender seeing these checks and reaching a conclusion that you may be over-reliant on credit.

Finally, keep a regular check on your credit history held by the agencies. You can do that via our dedicated credit reports hub. If anything irregular comes up on the report, be sure and take steps to have the information removed by the credit company involved.

Do all mortgage lenders use credit scoring?

No! And this is good news for anyone whose credit score is on the low side, but is otherwise eligible for a mortgage. Some mortgage lenders simply check whether you have adverse credit and look at the circumstances surrounding the issue.

They will make a decision on whether to lend to you based on factors such as the age, severity and reason for the bad credit, rather than use a numerical scoring system.