What Credit Score do you Need to Buy a House

What is a Credit Score?

Lenders use a credit score to assess whether you’re eligible for particular financial services such as credit cards, loans, or mortgages. The information on your credit report will be considered alongside your application, and lenders will apply their own formula to determine your overall score.

A credit score helps lenders decide whether you’re a good candidate for a loan and whether you’re the type of borrower that will be able to keep up their mortgage repayments.

Your credit score will play an important role throughout your life. Not only does it determine whether you’ll receive a loan or not but it will also decide what you end up paying in interest rates.

  • Important factors when it come to your credit report include:
  • How much credit you’re currently using
  • The status of your debts
  • Your repayment history
  • The number of times you’ve made credit applications, as each search generates a hard credit search. Soft credit searches are different; they’re used to confirm your identity, and lenders don’t have access to this information.
  • Other public records such as whether you feature on the electoral roll or not

What is a Good Credit Score?

Every lender has their own policy when it comes to credit scoring. Although this can make it confusing to obtain a loan, it also opens up other opportunities: when one lender turns you down, it doesn’t mean all lenders will.

Before you move on to make another application, find out the motivation behind the rejection. If you perform many credit searches in a tight time period, this will appear on your credit report and diminish your credibility with some lenders.

The top credit rating agencies use five categories to assess credit: excellent, good, fair, poor and very poor. Although they use the same categories, they use different numerical scales when assigning a credit score. That means you will receive a different score from every CRA you approach.

You’ll still probably fall into one category no matter which agency you approach. The score may be different, but the category (good, poor, etc) will stay the same. After all, they’re all using the same information – your financial history – when they make their decision.

A good score according to Experian lies between 881 and 960. A good score for Equifax is 420-265. At TransUnion, scores in the range of 604-627 are considered good.

What is a Recommended Credit Score to Buy a House

There is no set minimum credit score to buy a house in the UK. You just need to have a credit score that a lender is willing to lend to.

Each lender has their own credit criteria because some are happy to provide mortgages that others would consider too risky. If you’re offered a mortgage with a risky credit score, you should expect to pay higher interest levels on this loan.

One way to obtain a loan even if you have a low credit score is to save up a higher deposit.

What is the Lowest Credit Score for a Mortgage

Although a low credit score definitely increases the possibility that your mortgage application will be refused, you shouldn’t assume that you’re entirely ineligible because you’re score isn’t as high as you hoped.

You might consider approaching a lender that you already have a long, strong customer record with. Make sure your income is stable and sufficient to cover monthly payments. Save up as much money as possible for your deposit, too. You should have at least 10% or more to support your mortgage application.

It’s undoubtedly harder to secure a mortgage when you have a “bad” credit score. However, it isn’t necessarily impossible. It may just mean you have to save more and accept higher interest rates.

How Prosperity Wealth Can Help

Here at Prosperity Wealth, we know which lenders are most and least likely to accept mortgage applications with a low credit score. We can help you avoid making multiple mortgage applications – which reduce your score with every hard credit check. Instead, we can help you to target the most flexible lenders as effectively as possible.


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