Should I Buy a House or a Flat?
The age-old debate between buying a flat (apartment) and a house continues to be somewhat of a dilemma for homeowners. Each option comes with...
People often think they need a certain credit score to get a mortgage, but that isn’t always the case. So what is a credit score and how will it affect you getting a mortgage? What is a Credit Score? Your credit score reflects what type of borrower you are and how you manage the credit […]
18 December 2022
Table of Contents
People often think they need a certain credit score to get a mortgage, but that isn’t always the case. So what is a credit score and how will it affect you getting a mortgage?
Table of Contents
Your credit score reflects what type of borrower you are and how you manage the credit you have. Sensible borrowing and repayment will improve your credit score, whereas missing payments and going over your credit limit will likely reduce your credit score. They will usually look at similar things, but some things will be more of a concern to certain lenders.
You want to aim for as big a score as possible, as this means you are managing your borrowing effectively. However, there is no set score that you have to reach for a mortgage. There are three major credit reference agencies (CRAs). They are Equifax, Experian and Transunion. They all use an independent scoring system.
As an example, Equifax’s credit score is out of 1000. A score over 670 is considered very good, 531-670 is good, 439-530 is poor and 0-438 is very poor. For Transunion, a good credit score is 604 or above (max 710). For Experian, over 881 is considered a good score.
Lenders will look at your credit history and may look at up to 6 years’ worth of data. So young people who have no credit history may find it just as hard to get a mortgage as an older person with a bad credit history. Missed payments, CCJs, bankruptcy and high levels of lending can all raise red flags to lenders. Lenders will also look at your individual affordability, such as your income and any existing financial commitments. This can include things such as nursery fees that wouldn’t show on your credit file.
The best way to prepare to get a mortgage is to use one of the credit reference agencies and review your credit file before you apply. This will give you time to improve your credit score. Having a lower credit score won’t necessarily mean you won’t get a mortgage, but it may reduce your chances of securing the best deal.
Yes, you can. Having bad credit does not rule you out from being able to get a mortgage, and there are some lenders which offer mortgages for people with bad credit. However, they are often not at the best interest rates and can incur higher fees.
If you are concerned about getting a mortgage with your current credit score, it would be worth speaking to an independent broker or mortgage advisor who can assess your situation and look for the best deal for you.
If you are thinking of buying a house, now is the time to look at your credit history and look to improve your credit score.
Ways to do this include:
If you have any questions, don’t hesitate to get in touch with Propertyable. For more information about buying a house as a first-time buyer, follow this link to learn more. If you’re curious about the costs of buying a home, you can read our library of articles to learn more.
From mortgages and insurance to viewings, offers, exchange and completion, our Buyers’ Guide will take you through everything, step by step, from start to finish.
© Copyright Propertyable 2024. All rights reserved.