What credit score is needed to buy a house?

There are many things you have to come to terms with as an adult – paying bills on time, learning you need to add salt to a dishwasher and, of course, keeping an eye on your credit score.

If you’re planning on buying a flat or a house, then a good credit score is essential so a bank can lend you money for a mortgage.

For those not clued-up, your credit score is a number typically between 300–900 which refers to consumer’s creditworthiness and gives companies an idea of how reliable you are at borrowing and repaying money.

Lots of things can impact this score, such as loans, debt, payment history, credit card bills and more – so it’s important to get one that is ‘mortgage ready’ before you plan to buy.

Here are some crucial things to keep in mind…

What credit score do you need for a mortgage?

David Castling, director of intermediary lending at Atom Bank said: ‘There is no set “magic” number in your credit score which means you qualify for a mortgage, lenders in the UK all use different thresholds linked to their own lending appetite and the score value that gives an accept will vary. 

‘Some lenders don’t actually use a score at all and use a combination of other things such as looking at your income, the debt you owe, your financial conduct, the size of the loan versus the value of the property and employment type to make a lending decision.’

What will be taken into account with a credit score?

Holly Andrews, managing director at KIS Finance, explains that the follow things will be taken into account:

  • Information on your credit report, including your credit history and they will look for any information on public records such as county court judgements, bankruptcies, or individual voluntary arrangements.
  • Your monthly income and outgoings which they use to determine whether you can afford the mortgage repayments.
  • All the information that you gave them on your application form.
  • Any information that they already hold you, for example if you already have a bank account or loan with them.
  • Their own lending criteria as this varies from lender to lender.

Checking your credit score on all three of the main credit reference agencies – Experian, Equifax and TransUnion – will give you a good idea of where you stand and whether you need to do more to build it up.

What credit score do you need for a mortgage?

Caroline Hughes, co-founder of digital personal finance platform, Lifetise, says: ‘We have three main credit scoring agencies in the UK and they each score differently. So ideally you’re looking for the following scores: Experian: Good is 881+, Excellent is 961+; TransUnion: Good is 604+ (rating 4), Excellent is 628+ (rating 5) and Equifax: Good is 420+, Excellent is 466+. 

‘You should check your credit score with all three agencies. If it’s not as high as you need, get a copy of your credit report to check if there are any errors. Even a tiny mistake in your address can have an impact – so if you spot an error, get in touch with the credit agency to ask for a correction.

‘To get a credit score, you need to show you can get and repay credit. So if you don’t have any credit cards, and have never taken out any loans, you might be surprised that your credit score is lower than you would expect. That is because there is no record of your ability to pay back credit.’

Caroline adds that to help build up your credit record, you could think about getting a 0% credit card and using that for everyday purchases, then paying it off in full every month.

She also stresses the important or getting ‘mortgage ready’ and planning in advance.

Caroline adds: ‘You should start thinking about sorting your finances out at least 6 months before you apply for a mortgage. That means not applying for any credit cards or loans in that period. Paying down any outstanding debts if you can and getting out of your overdraft. You want to look as good as possible to the lender before you apply.’

How to check your credit score for free?

Moneysupermarket’s online Credit Monitor lets you check your score for free.

Likewise, Experian offers new customers a free 30-day trial of its CreditExpert service, which gives you access to your credit report, score, and email alerts about any changes on your file. After the trial ends, it costs £14.99 a month.

Similarly, Equifax offers a free 30-day trial of its full credit monitoring service. It costs £7.95 a month after the free trial. Alternatively, you can get your Equifax report and score free for life through ClearScore.

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