Sammie Ellard-King
I’m Sammie, a money expert and business owner passionate about helping you take control of your wallet. My mission with Up the Gains is to create a safe space to help improve your finances, cut your costs and make you feel good while doing it.
Quickfire Roundup:
It may not be the answer that you were expecting, but there is no minimum credit score needed to buy a house in the UK.
However, that doesn’t mean that your credit score isn’t important.
Higher credit scores open up more products from more mortgage lenders. A lower credit score can limit your options and lead to you paying more.
The good news is that if you know what your credit score is, you can take steps to improve it before you apply for a mortgage.
Knowing what credit score is needed to buy a house can get a little confusing.
First, you need to know what a credit score is, and then you need to get your head around what’s on your credit report and how it affects you.
You no doubt already know that the higher your credit score, the better. This applies to a range of financial products, not just mortgages.
You probably also already know that a poor credit rating can make things that much tougher for mortgage loans, personal loans, overdrafts and credit cards.
To get yourself where you need to be, you need to understand what makes a poor score compared to what goes into an excellent score.
You then need to understand these scoring systems so that you can maximise yours. Let’s take a look at this now.
Table of Contents
What even is a credit score?
Your credit score is what you’re allocated by the three credit reference agencies in the UK.
These credit reference agencies hold details of your credit history and allocate you a score that’s appropriate to how you handle your credit commitments.
Missed and late payments, along with a high debt-to-credit ratio, can all bring your score down.
If you’re looking for a minimum credit score needed to buy a house, the problem is that each credit reference agency has slightly different scoring systems.
Each unique scoring system means that what may be a great credit score with one agency, is classed as a poor credit score with another.
As well as this, each lender has its own unique in-house scoring system.
The issue here is that they don’t disclose the details of these.
That makes it almost impossible to give a definitive answer when it comes to the credit score that’s needed to buy a house.
Who are the credit reporting agencies in the UK?
The credit reporting agencies in the UK are:
- Experian
- Equifax
- TransUnion
What's classed as a good credit score when trying to buy a house?
The truth is that mortgage lenders don’t get to see the credit score that the reference agencies allocate you. You can only see these scores.
What lenders can see, is the information that has been used to arrive at the score. Each credit reference agency has its own banding for scores.
If you can get yourself into the ‘good’ band, you’ll find that more deals are available to you.
A very poor score could mean that you are barred from the top deals and may find it hard to secure a mortgage at all.
If you do, you may require a larger deposit, and monthly repayments will be higher.
Credit scores are arrived at by looking at your credit history. Someone with a good credit score will have a low debt-to-income ratio, never have missed payments and won’t have been late with any.
A credit report that contains details of lots of missed and late payments, as well as maxing out the credit that’s on offer to you, will likely lead to a bad credit score.
How the score in your credit report varies between agencies
Let’s take a look at each credit reference agency and what’s classed as good and bad according to the different scoring systems:
Equifax
- Poor credit score – 300 – 579
- Fair credit score – 580 – 669
- Good credit score – 670 – 739
- Very good credit score – 740 – 799
- Excellent credit score – 800 – 850
Experian
- Very poor credit scores – 0 – 560
- Poor credit score – 561 – 720
- Fair credit score – 721 – 880
- Good credit score – 881 – 960
- Excellent credit scores – 961 – 999
TransUnion
- Very poor – 0 – 550
- Poor – 561 – 565
- Fair – 566 – 603
- Good – 604 – 627
- Excellent – 628 – 710
Although each credit reference agency has a slightly different scoring system, ultimately, the higher your score the better, different lenders will have different views on what credit score unlocks the best mortgage rates.
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What is bad credit and will it stop me from getting a mortgage loan?
While it’s true that there’s no minimum credit score when it comes to your mortgage application being accepted, the truth is that a low credit score will affect your chances of success.
Again, mortgage lenders can’t actually see your credit score but, if your credit file is full of negative factors, there’s a very good chance that most lenders will reject your application.
That being said, there are other factors that mortgage lenders consider, such as:
- Your credit utilisation rate and outstanding debt – the lower, the better
- How much deposit you can provide? A higher initial deposit can lower the risk faced by mortgage lenders. It can also lower the interest rate that you’ll pay
- Your monthly income. Your gross monthly income matters but be sure you know what your net is too
- If you’ve applied to multiple lenders and been refused for credit products
Some of this information isn’t available from credit agencies and this means that you’ll need to supply it as part of your mortgage application.
Each of the mortgage lenders will have its own scoring system, and often they won’t reveal exactly how it works.
If you know that your credit score is on the lower side, there is a bigger need to use the services of a mortgage broker.
They can help you to get your mortgage application right and ensure that you’re applying to mortgage companies that are more likely to say yes.
How to improve your credit score
Here’s a look at some of the steps that you could take to improve your credit score, and boost your chances of being successful when applying for a mortgage loan:
- Get yourself on the electoral roll if you haven’t already
- Wait for credit issues to fall off your file before applying for a mortgage loan – this usually takes 6 years
- Bring credit card balances down
- If borrowing money, don’t access the maximum amount of credit available – keep your debt-to-credit ratio low
- Check your credit report regularly with all major credit reference agencies. If your credit files aren’t accurate, you can challenge this and have corrections made. You’ll only know about this if you keep your eye on your credit report
Boon Brokers are one of the UKs leading online mortgage brokers. They have a 5-star excellent Trustpilot rating with over 543 reviews.
- No mortgage fees
- Whole of market access
- Free online consultations
- Directly authorised by the FCA
- No in person meet ups
FAQs
What is the best credit score to buy a house?
In the UK, there is no specific “best” credit score to buy a house, as lenders will consider a range of factors when assessing a mortgage application.
Generally, a credit score of 700 or higher is considered good, and a score of 800 or above is excellent.
However, it’s important to note that credit scores are just one part of the overall picture when it comes to mortgage lending, and lenders will also consider your income, employment status, and other financial commitments.
It’s always a good idea to speak to a mortgage advisor who can provide tailored advice based on your individual circumstances.
What is the minimum credit score to buy a house in the UK?
There is no fixed minimum credit score requirement to buy a house in the UK. However, a good credit score is generally considered essential to obtain a mortgage, with most lenders requiring a score of at least 620.
It is important to note that credit scores are just one of many factors that lenders take into account when considering a mortgage application.
Can you get a mortgage with a credit score of 550?
It is possible to get a mortgage with a credit score of 550 in the UK, but it may be more challenging. Lenders typically prefer borrowers with higher credit scores, as it indicates a lower risk of default.
If you have a low credit score, you may need to provide additional documentation and demonstrate a stable income and financial history to strengthen your application.
Final thoughts
As we’ve seen, there is no minimum credit score to aim for when buying a house. However, that doesn’t mean that your credit history doesn’t matter.
A low credit score will impact your chances of securing a mortgage loan, and you need to ensure that your credit report is as favourable as possible.
To boost your score, aim to bring down credit card balances, ensure payments are made on time and pay attention to the other factors that lenders will consider.
Remember, the information on your credit file won’t mean that you’re automatically turned down for a mortgage. It means that you may need to work harder to secure one.
This could involve the use of a broker. You’ll find that a low credit score will impact loan terms in an unfavourable way leading to the need for a bigger deposit and the likelihood of higher interest rates.
To secure the best interest rate and the best overall mortgage deal, pay attention to your credit reports at each of the agencies and get your credit score in order.
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Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
