How does your credit score affect your ability to get a mortgage?

When it comes to getting a mortgage, few financial factors are as influential as your credit score. How much of an effect does it actually have?

Mortgage lenders rely heavily on your credit score to assess your eligibility and determine the terms they can offer you. This is because it serves as a snapshot of your financial history and responsibility, and offers insights into your financial behaviour, giving lenders an idea of how much of a risk you are to lend to.

Here’s how your credit score impacts your chances of getting a mortgage:

Lenders and different credit ratings

Lenders will have their own criteria for what establishes a good credit score. Falling below their individual thresholds could make it challenging to get a mortgage or secure more favourable terms, but it isn’t impossible.

Equally, a strong credit score can be a door opener to a wider range of mortgage options and more competitive interest rates.

Interest rates and credit

The interest rate on your mortgage is heavily impacted by your credit score. Generally, individuals with higher credit scores are offered lower interest rates, whereas those with lower scores may face higher rates. Even a minor variation in rates can have a big impact on both your monthly mortgage payments and the total cost of your loan throughout its term.

Your credit history

Having no credit history at all can also affect your mortgage eligibility. Lenders rely on your credit history to gauge your borrowing behaviour, so lacking this history may limit your options when it comes to the type and terms of mortgages available to you.

Navigating credit scores and mortgages

Your credit score plays a vital role in your mortgage application. To increase your chances of securing a mortgage that suits your needs, it’s important to maintain a healthy credit score.

Feel free to reach out to our team of advisers today to explore how we can assist you in finding a mortgage that aligns with your unique financial circumstances.