What credit score do I need for a mortgage?

For many people the first time they will ever look at their credit rating is when they first start looking for a mortgage – hopefully a few months ahead of time, but often only after having been rejected for one.

The mortgage market is complicated enough as it is, but on top of figuring mortgage types, loan to value and repayments you also have to look at your own credit worthiness and try to guess whether you will even be able to get a mortgage.

Unfortunately it’s not as simple as just a credit score

Firstly, you will have a different credit score with each credit agency, the main two are Experian and Equifax and ideally you should pull up your report from both and find out your scores.

Secondly, mortgage lenders look at much more than just your credit score anyway. Each lender will have their own credit criteria and they will look for certain types of behaviour either positive or negative. For this reason you might be accepted by one lender and not by another.

It also depends on your income

If you have an excellent credit score but no income then you are very unlikely to be able to secure any sort of a mortgage. Conversely if you are a high earner and you want to borrow a relatively small amount you will not need such a good credit rating as someone with a lower income would.

So you can use a little bit of common sense as to what your credit actually needs to look like. If you know that making mortgage payments will be a struggle for you then you had better get your credit rating up to scratch before you even apply.

Lowering the bank’s risk

The bank are all about lowering their risk and maximising their reward, so the more you can do to lower the riskiness of your application the better.

A good place to start is by putting in the biggest deposit you can. You should also aim for the cheapest house you are prepared to live in and stay well below your maximum affordable borrowing amount.

So in answer to the question

Well it depends but think about the factors involved. By now you probably know what your deposit amount is likely to be and how much you plan to spend. Have a look on a few mortgage calculators to get a feel for the maximum you could borrow and see how much under that you can go.

Example 1

If you are close to your affordability limit and you only have a 10% deposit you will probably need an excellent credit score. That’s at least 961 for Experian and 475 for Equifax.

Example 2

If you are well within your affordability and you have a 20% deposit you might only need to be on the lower side of ‘good’, so 881 for Experian and 400 or better for Equifax.

All of the above is very much an estimate of course and if you are serious about getting a mortgage your best bet is to pull up both your credit reports and speak to a mortgage advisor – he will be able to give you a good idea whether you will be accepted.

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