First-Time Buyers: Do You Need a Good Credit Score to Get a Mortgage?

Buying your first home is an exciting step, but we get it – it can also be a little overwhelming! You probably have lots of questions, especially when it comes to things like your credit score and whether it’s good enough to get a mortgage. Don’t worry, you’re not alone – we’re here to guide you through the process.

There’s no set “perfect” credit score required for first-time buyers, but the higher your score, the easier it could be to get a mortgage with a lower interest rate. Other factors, like your income, deposit size, existing debts, and overall financial health, will also be considered by lenders when they assess your application.

In this guide, we’ll help you understand how your credit score impacts your chances of getting a mortgage and share some easy tips on how to improve your credit score before you apply.

What’s a Good Credit Score for First-Time Buyers?

The definition of a “good” credit score can vary slightly depending on which credit reference agency you check and what each lender is looking for. In the UK, the main agencies are Experian, Equifax, and TransUnion, and each uses a different scoring system.

Here’s a rough idea of where you stand:

• Experian: A score of 700 or higher is considered good.
• Equifax: A score of 420 and above is good.
• TransUnion: A score over 600 is generally seen as good.

Having a “good” credit score increases your chances of getting approved for a mortgage and may even help you secure a lower interest rate, which means lower monthly repayments over time.

That said, each lender has their own way of assessing risk, and they’ll also take into account your income, debt-to-income ratio, and deposit size, so don’t panic if your score isn’t perfect!

Is There a Minimum Credit Score?

There isn’t a hard and fast minimum score for first-time buyers, but most lenders tend to look for a fair or average credit score, which is typically around 600 or above.

If your credit score is lower than that, don’t worry – there are still options. Some lenders specialise in helping buyers with less-than-perfect credit, but these deals may come with higher interest rates or require a larger deposit.

In short, having a higher credit score can help you secure a better deal, but even if yours isn’t ideal, there are still plenty of options out there.

What If I Have Little or No Credit History?

If you don’t have much of a credit history yet, it could be harder for lenders to assess your ability to make regular repayments. This doesn’t necessarily mean you won’t be able to get a mortgage, but you may be offered higher interest rates or need a larger deposit.

Lenders like to see a bit of history to understand how you handle credit. If you’re just starting to build your credit, here are a few things that could help boost your score:

Limit the number of credit applications you make, as too many can negatively impact your score. Make sure you’re registered on the electoral roll (it’s a simple way to improve your credit file). Open a UK bank account if you haven’t already. Pay your bills on time to show you’re responsible with your money.

Can I Get a Mortgage with a Bad Credit Score?

It’s possible to get a mortgage with a bad credit score, but it might be trickier. If you have a larger deposit, this can help improve your chances as it lowers the loan-to-value (LTV) ratio. But with a lower credit score, your choice of lenders might be more limited, and you’ll likely face higher interest rates.

It’s all about approaching the right lenders. Some specialise in helping buyers with poor credit, so it’s important to work with a mortgage broker who can steer you in the right direction and help you find a lender that suits your situation.

Sounds good, right? All you need to do is book a call with us.