How does my credit score affect my mortgage application?

There’s no perfect credit score for a mortgage application, but it’s important to check your credit report before you apply.

A mortgage is not just a big commitment for you, but it’s also a risk for the lender. As well as considering your current income and outgoings to decide if they’re comfortable lending to you, they'll also want to see your history of borrowing and repaying money by checking your credit report.

In this guide, we break down what you need to know about how credit scores and reports affect your mortgage application.

What is a credit report?

A credit report is a detailed record of how you've managed credit over time. It includes information about your past and present credit accounts like loans, mortgages and credit cards. Your credit report will also include other credit you’ve taken out, like mobile phone plans.

Your credit report details your repayment history, including any missed or late payments. It will list your outstanding debts and if you've ever been declared bankrupt or had a County Court Judgment (CCJ).

The report helps lenders review your history with credit so they can decide if they’re happy to lend to you.

What credit agencies do lenders use?

There are three main credit reference agencies that lenders use - Experian, Equifax and TransUnion. They hold information about your borrowing and repayment history, which is compiled into the credit report and a corresponding credit score. A credit score is a number that reflects how good or bad your credit history is. Lenders use this information to assess you when you apply for a mortgage.

Not all lenders use the same credit reference agency and some may use more than one as part of their assessment. Each credit agency has its own way of calculating credit scores which means it can vary and you’ll be scored out of a different number too.

What credit score do you need for a mortgage?

There’s no set score that will guarantee you a mortgage because it’s just one part of the lenders’ financial checks. A higher credit score can improve your chances of being accepted for a mortgage, but only if you meet other affordability criteria.

Here’s how credit scores are banded across the three agencies:

Experian

• Excellent - 961–999
• Good - 881–960
• Fair - 721–880
• Poor - 561-720
• Very Poor - 0–560

Equifax

• Excellent: 811–1,000
• Very good: 671–810
• Good: 531–670
• Fair: 439–530
• Poor: 0–438

TransUnion

• Excellent: 628–710
• Good: 604–627
• Fair: 566–603
• Poor: 551–565
• Very poor: 0–550

So you could have a score of 628, 811 and 961 - and they’d all be considered excellent. With such varied results, it can be difficult to define what a ‘good credit score’ actually is.

How to check your credit rating

At least two months before you want to apply for a mortgage, check the information logged on your credit reports is correct and up-to-date.

It’s best to check the reports with all three agencies before your mortgage appointment so you have all the information lenders can access.

Another reason to get your credit reports before applying for a mortgage is so you can check if the information logged about you is correct. Look for any mistakes in your personal information, like an incorrect address, name spelling or date of birth. Also, check for any accounts listed on your reports that don’t belong to you or any incorrectly logged payment defaults.

Leaving mistakes on your credit report can lower your credit score and may result in the lender declining your application, so spending time on this is well worth the effort.

How to correct credit report errors

Once you’ve got your reports, if you do spot anything you believe is incorrect, contact the credit reference agency. They’ll either be able to make the change, or they’ll ask the lender to review their records to see if they agree to the amendment.

If the lender agrees, it can take weeks to update your credit report. That’s why it’s best to start this process at least two months before you want to apply for a mortgage.

If the provider doesn’t agree to make the change, you can raise a dispute with the agency and follow the credit provider’s complaint process.

If you feel something on your credit report doesn’t accurately reflect the situation – for example, you missed a payment due to a bereavement, you can add a Notice of Correction to your credit report. This is a 200-word statement that shares your explanation of the reason for the missed payment. You can add a Notice of Correction to your account via the credit reference agency website. Mortgage lenders will see this when they get your credit report but there’s no guarantee it will change the outcome of their decision.

Do joint mortgage applicants both have to be checked?

Yes. If you’re applying for a mortgage with someone else, you’ll be equally responsible for repaying the mortgage so you both have to be credit checked.

When you apply for a joint mortgage, credit reference agencies will view you as financially linked. This means that the way one person conducts their borrowing and repaying can affect the credit score of the other because you’re linked.