Buying your first home is an exciting milestone. But it can also be daunting, especially when it comes to understanding first-time buyer credit scores in the UK. You might be wondering what minimum credit score first-time home buyers need, or if you can get a first-time buyer mortgage with no credit history at all? Loqbox has you covered!
This guide has some great advice for first-time buyers, and lays out some steps to buying your first home. Whatever your circumstances, there are options. So don’t panic if your credit score isn’t as good as you’d hoped, or if your income is low. There’s help for first-time home buyers.
What’s the minimum credit score for first-time home buyers?
A typical question you might ask when getting a mortgage is: what’s a good credit score for first-time home buyers? The truth is that there is no minimum credit score for first-time home buyers that will guarantee you a mortgage. Decisions are made on lots of criteria and different lenders will look at your credit history in different ways.
It’s true that your credit report will play a big part in whether you’re able to get a mortgage. That’s because lenders use your credit report to assess your creditworthiness and gauge the level of risk involved in lending money to you. Generally, the higher your credit score, the more likely you will be to get a mortgage.
Your credit scores are generated by the top three credit reference agencies (CRAs) in the UK: Experian, Equifax, and TransUnion. Lenders might only check with one agency but your credit score should be healthy with all of them.
Don’t know your scores? Check them with each of the CRAs for free, and without impacting them, using these great services:
*For transparency, we wanted to let you know that ClearScore pay us a small commission if you sign up using this link.
Are there first-time buyer mortgages with no credit history?
The short answer is yes. First-time home buyers with low, or no, credit scores do still have options when it comes to getting a mortgage. Of course, having low (or no) credit will make it more challenging to get a mortgage, but crucially it isn’t impossible.
You might be able to find specialist lenders who will look at your application regardless of your lack of credit history. Things like your employment record, your salary, and any savings that you have will all be considered with any mortgage application. So it may be that your credit history can be overlooked if the other elements are strong.
However, while it’s possible to get a mortgage with no credit history, be careful and check the conditions of the deal. Often, these types of mortgages will be offered with very high rates of interest or with large deposit requirements. This is because mortgage providers want to offset the risk of lending you the money when you don’t have a good track record.
There are lots of reasons why you might have no credit: having just turned 18, recently moved to the UK, having no bank account in this country, no employment history, or not being named on any UK bills. But everybody has to start somewhere. So, let’s look at some tips for first-time home buyers and available programs to buy a house with bad credit.
Grow your credit history
Building a credit history is crucial, even if you're starting from scratch. Consider applying for a credit card or becoming an authorised user on someone else's card to establish your credit. But be sure to make timely payments and maintain a low credit utilisation rate (which is how much of your available credit you’re using - try to keep it at less than 30%).
Obviously, if you are using credit responsibly, you are showing potential lenders that you can be trusted with their money. It can take time for your credit score to grow so it’s a good idea to get that going as quickly as possible. But be sure to use credit responsibly, otherwise you could actually damage your credit score. That would be a backwards step!
Save more for your deposit
If your credit score isn’t great you can help to improve your application by saving early for a deposit to add to your mortgage.
Deposits can significantly impact your mortgage options. You should aim to save at least 10-20% of the house price, but check with different lenders to see what will be a good deposit amount to reach.
Boost your credit score
If your credit score isn’t great, remember, it’s not set in stone. You can always improve it. Pay your bills on time, reduce your outstanding debts, and avoid opening new credit accounts that you can’t afford. Over time, these efforts will all help increase your creditworthiness.
But if you’re looking to apply for a mortgage sooner than that, one of the quickest ways to grow your credit score is by getting started with Loqbox Grow.
If you don’t see yourself applying for at least six months, Loqbox Rent lets you show your rent payments on your credit history with Experian — and that doesn’t matter if you pay a landlord, local council, or friend.
If you don’t think you’ll be applying for a year or so, Loqbox Save could also help you build your credit score as you save more for the deposit. When used together, these three tools could grow your credit score by up to 300 points in the first three months. All three of these are included with a full Loqbox membership (£2.50 a week, or £99 for the yearly plan).
Improvements to your credit score are not guaranteed.
Open a bank account and get on the electoral roll
Part of any credit check that a lender will do on you is to establish that you are who you say you are. If they can be confident of that, they are much more likely to consider your application. Two things that you can do right now to really help your mortgage (and generally improve your credit score) are open a bank account and get on the electoral roll.
It might seem obvious, but without a UK bank account you will likely find it extremely difficult to get a mortgage in this country. Make sure that you have one open in your name — you can use our bank account cheat sheet to help you choose the type of account that is right for you.
The Electoral Roll is a list of everybody eligible to vote in the UK. Be sure your name is listed on the Electoral Roll as this is how lenders check your identity. Register to vote here, or contact the credit reference agencies to add a note to your credit file to explain why you’re unable to (you don’t actually have to vote if you don’t want to - just be on the list!).
Seek professional advice for first-time home buyers
Shop around for great mortgage advisors who can give you expert guidance tailored to your specific needs.
Not all brokers charge a fee (they can take commission from the mortgage deal), and they can help you navigate the complex home-buying process and ensure you have a great first-time home buyer strategy including any affordable home ownership programs they recommend. They will know which lenders are likely to look at applications with low, or no, credit history, so douse their help.