Mortgages with a Poor Credit Score

‘Will a low credit score affect my chances of getting a mortgage?’

Published 6th March 2018

People worry that it can be difficult enough getting a mortgage deal with a reasonable credit score – but what do you do if you don’t even have that? If you’re in that position and you’re asking yourself, “How do I get a mortgage when I have no (or a low) credit score?”, then you’ve come to the right place. We’ve gathered together here all the information you need to help you to achieve your dream of homeownership.

  1. I’ve never had credit before. Is this a good thing?
  2. How this all effects you?
  3. A word of warning
  4. What next?
  5. Take care of the basics
  6. Make good any problems
  7. Start building a good credit history
  8. How can we help you?

As straightforward as this process is, it is likely you will still need some more in-depth advice into each area, so read on for more information.

Can I Get a Mortgage With No Credit Rating?

First up, an uncomfortable truth. You might think that if you haven’t had credit before – or if you’ve had very little credit, which you’ve paid off as agreed – then you’re in a strong position when it comes to applying for a mortgage. You have no black marks, no red flags, no financial skeletons in your closet. The bad news is that you are potentially in no better a position than if you had a chequered credit history – and, in fact, you could be worse off.

The reason is that lenders look for a pattern of behaviour as part of the process of making a lending decision, and if there is no record of behaviour to see a pattern in, then you are an unknown quantity. You could be seen as a risk, as they have no evidence that you can manage your finances well.

We know that seems unfair, but you need to know where you stand.

Poor Credit Score Mortgages

We’ve already mentioned that you could be seen as a higher risk if you have no or a low credit score. Let’s consider the potential impact of that on any mortgage applications you might make.

  • The lender says ‘No’ – they just turn you down flat.
  • The lender asks for a bigger deposit – they’re not prepared to offer you as much as you want to borrow, but they do make an offer, leaving you with the problem of coming up with the additional money.
  • The lender charges higher fees – limited choice could result in you having to pay more to the lender that is happy to assist.
  • The lender charges a higher rate of interest – they do this to reflect the perceived increased risk of lending money to you.

All of this can be dispiriting. It can feel like you are being unfairly punished, sometimes for no reason other than that you are just starting out and have yet to prove yourself.

Sometimes you just have to take their decision on the chin, either because you can’t at the moment raise a bigger deposit or because you have to wait for something to drop off your credit report. (Things typically stay on there for six years.)

Other things you can do something about, and we’re going to take a look at those things shortly.

A word of warning

Whatever you do, resist the urge to make scattergun mortgage applications, in the hope that you get an acceptance. For a start, you likely only have access to mainstream lenders, and they can be the least flexible of all when it comes to people with a low or no credit score. All you’ll do by approaching them one after the other is potentially get a series of rejections, and a record of credit applications that could do further damage to your credit score.

Unsure how to proceed? Get in touch with one of our expert advisers for more information, or read on for our detailed step-by-step guide for how to get a mortgage with no/low credit score.

What Can Be Done About a Low Credit Score?

As we’ve established, whether you have a credit history with a low score, or little or no credit history to speak of, you need to approach getting a mortgage in pretty much the same way. The main thing you have to do is establish a reasonable credit record, and we’ve broken down some of the actions you can take into these three stages:

Stage 1: Take care of the basics

Stage 2: Make good any problems

Stage 3: Start building a good credit history

We’ve broken things down further and explained each individual step you need to take within each stage, to make it all as straightforward as possible.

Let’s get started.

How Can You Improve Your Credit Score?

There are some things you can do that are pretty basic. These are good practice for everyone, no matter what their credit status is – think of them as housekeeping duties, and get into the habit of doing these regularly, perhaps every one or two years.

Make good any problems

At this stage, what you are left with on your credit report are good and possibly bad entries. The good entries obviously aren’t a problem, but anything that can be classed as an adverse credit event potentially is. In some cases, it’s something that you can do something about. Some things help now, and everything can help in the future – the longer ago something happened, the less impact it generally has.

Start building a good credit history

In order to prove you will handle your accounts responsibly, you have to have some accounts to handle. That means you need to access some form of credit. If you have a mobile phone on a monthly contract, then that’s a start and it should help – but not as much as having a loan from a major bank, for example. Here are some suggestions.

Can I remortgage with a low credit score?

Most mortgage lender’s run a credit scoring system, so if you have a low credit score that can make it difficult to meet the minimum credit score for each individual lender. Thankfully there are mortgage lender’s who do not credit score but ‘credit search’, meaning the lender will search your credit report as a whole to check that each account conduct meets their criteria not just focusing on the score.

Specialist Mortgage Broker

If you’re struggling to get a mortgage because you have no or a low credit score, or you’re just not sure what to do next, get in touch, because we can help. We have a specialist team of mortgage brokers who have experience of working with people with a low or no credit score, plus access to the lenders from across the UK mortgage market – meaning we can access deals you probably can’t. Contact us now for free initial no obligation help and advice.

  • - What is a good credit score?
  • - What is a bad credit score?
  • - How can I improve my credit score?
  • - How do I check my credit score?
  • - What is a credit score?
  • - How do I get a good credit score?
  • - How is a credit score used by
    mortgage lenders?
  • - What is the best credit score site?
  • - How long does it take to improve a credit score?
  • - Can I get a mortgage with a bad credit score?
  • - What is adverse credit history?
  • - How is a credit score calculated?
  • - Does a joint bank account affect credit score?
  • - Does a joint account affect credit rating?
  • - Does ‘buy now pay later’ affect credit score?
  • - Can I get a mortgage with no credit history?
  • - How does credit history work?
  • - What credit history is needed for a mortgage?