Do You Need A Good Credit Score To Get A Mortgage In 2023?

For years and years, we are told to improve our credit rating, how to improve our credit score, without a good credit score we can’t get a mortgage - but the longer we do this, the more we are starting to realise that this simply isn’t true.

Take the following example of a real situation, over recent weeks:

• Client A:
  934 Credit Score on Experian
  £90,000 income
  Mortgage of £200,000
  = Declined a mortgage by all High Street lenders

• Client B:
  627 Credit Score on Experian
  £27,000 income
  First Time Buyer (so hardly any credit history)
  Mortgage of £89,000
  = Accepted first time of trying with the cheapest lender available to them

So why has this happened? Surely Client A is the safer bet? - On paper yes, and this is what large establishments will have you believe in order for you to take out a credit card with them, or enter your personal details to add 5 points to your credit file. It’s all to get more business from you.

The truth of the situation is that Client A, had a missed mortgage payment 3 months ago. As such, no High Street lender would consider this client due to their recent struggles, paying the mortgage they have. Would you lend to someone who has recently missed payments?

Client B on the other hand, has a low score not because they’ve had credit issues/missed payments, but because they have a ‘thin credit file’ whereby they’ve not had much in the way of borrowing before. As such, they don’t have an extensive history of making payments, but this doesn’t mean they are a bad client.

When applying for a mortgage, a mortgage lender will carrying out their own credit score/search. This is internally designed, and tailored for each lender.

No one knows the exact operations of these scoring systems and therefore impossible to predict what will result in a pass/fail, but we can promise you one thing… it isn’t a simple case of looking at your Experian Credit File and the score at the top!

Lenders are far more concerned with your history of payments, being registered on the electoral roll, having all correspondence to one address and being well within all credit limits.

Summarising thoughts?
Although a good guide for showing your overall ‘financial health’, your credit score really does count for very little when trying to obtain a mortgage. We encourage anyone thinking they need to wait to build a better score, contacts one of our team today.

After all, waiting until your credit rating is 999 could cost you thousands more in how much you pay for the property (as house prices continue to rise), the stamp duty that follows, and could cost even more in additional interest as rates continue to rise. As such, the overall impact could be massive for something you could have achieved sooner!

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If you’re looking to review your options, or wanting to chat to someone about what steps you need to take next, get in touch, our mortgage advice service is free for all.

Providing mortgage advice across the UK, our mortgage brokers are here to support you. Whether you are moving home, looking for a first time buyer mortgage, looking to refinance your home, or looking at what buy to let mortgage rates are available to you, we can support any need.

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