Your credit history can play an important part in getting a mortgage.
However, there is a common misunderstanding.
There is no single credit score that decides whether you can get a mortgage.
Credit reference agencies may give you a score. However, mortgage lenders use their own checks when deciding whether to lend.
Therefore, it is better to focus on your overall credit history and finances, rather than chasing a particular score.
What Is a Credit Score?
A credit score is a number designed to give an indication of your credit position.
It is based on information in your credit report.
For example, your report may contain details about:
- credit cards
- loans
- mortgages
- payment history
- outstanding balances
- credit applications
- missed payments
Credit reference agencies use this information to produce their own scores.
However, their scoring systems are different.
Is There One UK Credit Score?
No.
The three main UK credit reference agencies are:
Experian
Equifax
TransUnion
Each holds information about your credit history.
However, the information may not be identical.
They also use different scoring systems.
Therefore, you could have a different score with each agency.
Which Credit Score Do Mortgage Lenders Use?
Mortgage lenders do not simply look at the score you see from a credit reference agency.
Instead, they use their own lending rules.
They may check information from one or more credit reference agencies.
They can then combine this with other information from your mortgage application.
For example, they may consider your:
Income
Debts
Regular spending
Deposit
Employment
Credit history
Therefore, the score shown in a credit app is only part of the wider picture.
What Is a Credit Report?
Your credit report contains information about your borrowing history.
This is usually more useful to understand than the headline score.
It may show your:
- credit accounts
- outstanding balances
- payment history
- missed payments
- defaults
- financial associations
- recent credit searches
Lenders can use this information when deciding whether to offer you a mortgage.
Why Does Credit History Matter?
A mortgage is a large loan.
Therefore, the lender wants to understand how you have managed borrowing in the past.
For example, it may look at whether you have made payments on time.
It may also consider how much debt you already have.
This information helps the lender assess your application.
Does a Good Credit Score Guarantee a Mortgage?
No.
You could have a very high credit score and still be declined for a mortgage.
For example, the lender may decide that:
- the mortgage is not affordable
- your income does not meet its rules
- you have too much existing debt
- the property is unsuitable
- your deposit does not meet its requirements
Therefore, good credit does not guarantee approval.
Can You Get a Mortgage With a Low Credit Score?
Possibly.
A low score does not automatically mean that every mortgage lender will decline you.
Remember, lenders use their own systems.
The information behind the score is more important.
For example, a low score caused by a limited credit history is different from one linked to recent missed payments.
Therefore, the reason behind the score matters.
What Can Appear on Your Credit Report?
Your credit report can contain information about many types of borrowing.
For example:
Mortgages
Personal loans
Credit cards
Overdrafts
Car finance
Store credit
It can also show how these accounts have been managed.
Do Missed Payments Affect a Mortgage?
They can.
A missed payment may appear on your credit report.
Mortgage lenders can consider this when assessing your application.
However, the effect can depend on several factors.
For example:
How recent was the missed payment?
How many payments were missed?
What type of account was involved?
What has happened since?
Therefore, one missed payment does not tell the whole story.
What Is a Default?
A default can be recorded when a credit agreement has fallen seriously behind.
This is more serious than simply making one payment late.
A default can affect your mortgage options.
However, lenders have different rules about previous credit problems.
The age, amount and circumstances of the default may also matter.
What Is a County Court Judgment?
In England and Wales, a County Court Judgment (CCJ) can be issued when someone owes money and court action is taken.
Scotland has a different legal system. Court judgments for debt are handled differently.
Court-related debt problems can affect mortgage applications.
However, lender rules vary.
Therefore, previous problems do not automatically mean that a mortgage is impossible.
What Is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal debt solution used in England, Wales and Northern Ireland.
Scotland has different debt solutions.
An IVA can have a major effect on access to credit.
Mortgage options may therefore be limited during and after the arrangement.
Specialist advice may be useful in these circumstances.
What About Bankruptcy or Sequestration?
Previous insolvency can also affect mortgage applications.
In Scotland, bankruptcy is commonly known as sequestration.
A lender may consider:
- when it happened
- when you were discharged
- your financial position since then
Different lenders have different rules.
Therefore, mortgage options can change as more time passes.
Does Having Debt Damage Your Credit Score?
Having debt is not automatically bad.
Many people with mortgages also have credit cards, loans or car finance.
The important issue is how the borrowing is managed.
However, large debts can affect your mortgage in another way.
They create monthly payments.
Therefore, they can reduce the amount of mortgage you can afford.
Do Credit Card Balances Matter?
Yes, they can.
Suppose you have several thousand pounds outstanding on credit cards.
The lender may consider those balances when checking affordability.
It may also look at how you use your available credit.
Therefore, reducing credit card debt before applying may sometimes help.
However, consider your deposit and wider finances before using savings to clear debt.
What Is Credit Utilisation?
Credit utilisation describes how much of your available revolving credit you are using.
For example:
Credit card limit: £5,000
Balance: £4,000
You are using 80% of that credit limit.
A high balance can indicate greater reliance on borrowing.
However, mortgage lenders do not all assess credit utilisation in the same way.
Therefore, avoid focusing on a single percentage as a mortgage rule.
Should You Clear Your Credit Cards Before Applying?
It may help in some cases.
Clearing or reducing balances can lower your debts.
It can also reduce your monthly commitments.
However, there can be a trade-off.
For example, using £10,000 of savings to clear credit cards could leave you with a smaller mortgage deposit.
Therefore, consider the effect on your finances as a whole.
Does an Overdraft Affect a Mortgage?
It can.
Having an arranged overdraft does not automatically prevent you from getting a mortgage.
However, regular or heavy use may be considered by the lender.
For example, repeatedly relying on an overdraft before payday may suggest that your monthly budget is tight.
Therefore, lenders may consider overdraft use alongside your wider finances.
Do Payday Loans Affect Mortgage Applications?
They can.
Some lenders may view recent short-term borrowing as a sign of financial pressure.
However, lender policies differ.
Therefore, previous use does not automatically mean every mortgage application will be declined.
The timing and circumstances may matter.
Do Credit Searches Affect Your Credit Report?
There are two main types of credit search:
Soft searches
and
Hard searches
They work differently.
What Is a Soft Search?
A soft search can be used to check your credit information.
You may see the search on your own credit report.
However, it does not appear to other lenders in the same way as a hard credit application search.
Some lenders use soft searches when providing a Mortgage in Principle.
What Is a Hard Search?
A hard search is usually linked to an application for credit.
It is recorded on your credit report.
Other lenders may be able to see that the search took place.
Mortgage applications can involve hard searches.
Therefore, avoid making unnecessary credit applications.
Are Too Many Credit Applications a Problem?
They can be.
Several applications within a short period can create several hard searches.
A lender may take this into account.
Therefore, applying for several:
- credit cards
- loans
- finance agreements
just before a mortgage application may not be helpful.
It is usually better to apply for credit when you genuinely need it.
Should You Avoid All Credit Before a Mortgage?
No.
There is no need to become afraid of using normal financial products.
The aim is simply to keep your finances stable and manageable.
Continue making required payments on time.
Also, avoid taking on unnecessary new debt before an important mortgage application.
Does Closing Credit Cards Improve Your Mortgage Chances?
Not always.
Closing unused accounts may seem sensible.
However, it can also reduce the total amount of credit available to you.
There is no universal mortgage rule that says you should close all unused credit cards.
Therefore, avoid making major changes simply to try to manipulate a credit score.
Focus instead on managing your accounts well.
Does Being on the Electoral Register Help?
Being registered to vote can help lenders confirm your identity and address.
Therefore, make sure your electoral registration is correct if you are eligible to register.
Also, make sure your address details are up to date across your financial accounts.
Why Does Your Address Matter?
Credit reports link financial information to you.
Accurate address information can help with this process.
If you have recently moved, make sure important organisations have your current address.
For example:
- banks
- credit card providers
- lenders
- electoral registration
Incorrect information can make financial checks more difficult.
What Are Financial Associations?
Your credit report may show a financial association with another person.
This can happen when you have held a joint financial product.
For example:
A joint mortgage
or
A joint bank account with credit facilities
The lender may consider relevant financial associations when assessing an application.
Does Living With Someone Link Your Credit Reports?
Not simply because you live at the same address.
Living with a partner or housemate does not automatically create a financial association.
The connection usually comes from joint financial arrangements.
Therefore, another person’s poor credit history does not automatically become yours simply because you share a home.
Can You Remove an Old Financial Association?
Sometimes.
For example, you may still be financially associated with a former partner even though your joint financial arrangements have ended.
You can check your credit reports to see which associations are recorded.
If the financial connection has genuinely ended, you can ask the credit reference agency about removing it.
This is sometimes known as financial disassociation.
What If You Have Never Borrowed Money?
Having little or no credit history can sometimes make assessment more difficult.
The lender has less information showing how you have managed borrowing.
This is sometimes called having a thin credit file.
However, this does not mean you should take out unnecessary debt simply to build a score.
Instead, focus on maintaining accurate financial records and managing any existing accounts well.
How Can You Improve Your Credit Position?
There is no instant way to create a perfect credit history.
However, some simple steps can help keep your records in good order.
For example:
- make required payments on time
- reduce debts where appropriate
- avoid unnecessary credit applications
- keep your address details correct
- register to vote if eligible
- check your credit reports
- correct genuine errors
- avoid relying heavily on short-term borrowing
Most importantly, give yourself time.
Credit history develops over months and years.
Check All Three Credit Reports
It can be useful to check your information with:
Experian
Equifax
TransUnion
The reports may contain different information.
Therefore, checking all three can help you find problems before applying for a mortgage.
What Should You Check?
Do not simply look at the score.
Check the actual information.
Look at your:
Name
Current address
Previous addresses
Credit accounts
Balances
Payment history
Financial associations
Credit searches
Make sure the information is correct.
What If You Find a Mistake?
Credit reports can contain errors.
For example, an account may show an incorrect balance or address.
If you find incorrect information, contact the credit reference agency or the organisation that supplied the data.
Try to correct genuine errors before making an important mortgage application.
Can You Add an Explanation to Your Credit Report?
In some circumstances, you may be able to add a Notice of Correction to explain information on your credit report.
However, this should be used carefully.
It does not remove accurate negative information.
It simply provides additional context.
If you are unsure whether this is appropriate, check the guidance provided by the credit reference agency.
How Long Does Information Stay on a Credit Report?
Different types of information remain on your credit report for different periods.
Some negative information can remain visible for several years.
However, the fact that something appears on your report does not tell you exactly how a mortgage lender will treat it.
The age and circumstances of the problem may matter.
Therefore, lender criteria are important.
What If You Have Bad Credit?
Previous credit problems do not always mean you cannot get a mortgage.
However, your options may be more limited.
You may face:
- fewer lenders
- higher interest rates
- larger deposit requirements
- stricter lending rules
The exact position depends on your circumstances.
Therefore, specialist mortgage advice may be useful if you have significant previous credit problems.
Should You Apply to Several Lenders to See What Happens?
Usually, making random applications is not a good way to test your options.
Different lenders have different criteria.
Repeated applications could also create additional hard searches.
Instead, try to understand which lenders may suit your circumstances before making a full application.
A mortgage broker may be able to help with this.
What If One Lender Declines You?
Do not assume that every lender will make the same decision.
Mortgage lenders have different rules.
One lender may decline an application that another would accept.
However, it is useful to understand why you were declined before applying again.
The issue may not even be your credit history.
For example, it could relate to:
- affordability
- income
- the property
- your deposit
- lender criteria
Therefore, avoid immediately making several more applications.
Credit Score and Mortgage Affordability Are Different
Your credit history and mortgage affordability are related, but they measure different things.
Credit history looks at how you have managed borrowing.
Affordability looks at whether you can manage the proposed mortgage.
You may have an excellent credit history but insufficient income for the mortgage you want.
Alternatively, you may have a strong income but previous credit problems.
The lender needs to consider the overall application.
What About Your Deposit?
Your deposit can also affect your mortgage options.
A larger deposit means you need to borrow less.
It also reduces your Loan-to-Value (LTV).
However, a large deposit does not erase previous credit problems.
The lender will still check your credit history and affordability.
Before Applying for a Mortgage
It can help to check your credit position early.
Start by:
Checking your credit reports
Correcting genuine errors
Reviewing your debts
Making payments on time
Checking your address details
Avoiding unnecessary new borrowing
You can then look at your wider mortgage position.
This includes your income, deposit and monthly budget.
Don’t Chase a Perfect Score
This is one of the most important points.
You may see advice online about trying to reach a particular credit score before applying for a mortgage.
However, there is no universal UK mortgage score.
Different lenders use different information and different lending rules.
Therefore, do not become too focused on moving a number from “good” to “excellent”.
Instead, focus on maintaining healthy and accurate financial records.
A Simple Credit Checklist
Before applying for a mortgage:
- check your credit reports
- check your personal details
- look for incorrect information
- review your outstanding debts
- make required payments on time
- check old financial associations
- avoid unnecessary credit applications
- keep your finances stable
These steps cannot guarantee mortgage approval.
However, they can help you understand your position before applying.
The Key Point
Your credit history is an important part of a mortgage application.
However, the credit score you see on an app does not decide whether you will get a mortgage.
Mortgage lenders use their own lending rules.
They may consider your credit history alongside your:
Income
Debts
Deposit
Spending
Employment
Overall affordability
Therefore, focus on the information behind your credit score.
Check your credit reports. Correct genuine errors. Manage your debts carefully and make your required payments on time.
Most importantly, remember:
There is no magic credit score that guarantees a mortgage.
A strong mortgage application is based on your wider financial position, not just one number.