When you make an application for a mortgage, lenders work out a credit score for you to decide whether to lend to you or not. In other words, they are trying to determine how much of a risk you represent. The higher you score, the lower risky you are and the more chance you have of being accepted for a mortgage, and at better rates.

It’s only natural to have fears over bad credit stopping you from getting a mortgage to buy your dream home. But do you even know how a lender takes its decision? Let’s have a look together at what credit score means for your mortgage application.

Lenders’ Decisions and Credit Score

Lenders use your credit report to get information on how reliable you’ve been at paying back debts in the past. Your credit rating (or credit score) is a snapshot of how you’ve managed money, including past borrowing, repayments, how much of your available credit you routinely use, how many payments you’ve missed and several other factors.

In the UK, there are three main credit reference agencies (CRAs): Experian, Equifax and TransUnion. Each with a slightly different scoring system. For Experian, a score of 961-999 is considered excellent. For Equifax, it will be between 466-700 and for TransUnion a credit score of 628-710 is considered excellent.

As a rule, the smaller the mortgage deposit you must put down, the better your credit score will need to be for lenders to accept your mortgage application. We advise you, ahead of applying for a mortgage, to check your credit score with them to find out how you rate and the likeliness for you to get a mortgage.

Bad or No Credit History

Getting a mortgage with bad credit is tricky, but not impossible. Even if you scored lower than you thought –in which case you’re considered to have no or very little credit history – don’t assume that you’ll be automatically rejected for a mortgage. Lenders will consider other factors when assessing your mortgage application, such as your history with them as a customer (if you are one) and if you have an income that’s both stable and comfortable enough to cover your monthly repayments.

However, if you have a bad credit score or had credit issues in the past, you may be able to take out a mortgage with a specialised lender. It’s always good to seek expert advice on which lenders are likely to be able to help.

Finally, and in the situation where your application was rejected, you can re-apply in the future as most lenders recognise that circumstances can change.

Book That Meeting

If you think that you are ready for your first meeting with a mortgage advisor – why not book that meeting today? We are always happy to answer any questions and we’ll make sure you are on track for buying your new home in no time at all. Get in touch with GPD Mortgage Solutions today to find out more!