I Hate My Landlord – What’s The Minimum Credit Score for a Mortgage?

We’ve all had a bad landlord. But is yours the absolute worst? Do they make your blood boil when they demand constant inspections, raise the rent, and refuse to do essential maintenance and repairs? I feel you.

I had such a terrible landlord that even the repulsive sound of his voice sent shivers down my spine. I knew I couldn’t keep renting and risk running into another slimy character like this guy. So, I started seriously thinking about getting a mortgage. But could I afford it?

That’s when I started thinking about my credit score and how it affected my chances of getting a mortgage. If you hate landlords as much as I do, it’s time you start thinking about yours.

Is My Credit Score Important for a Mortgage?

When you apply for any kind of loan or credit, lenders look at your score from at least one of the big three credit companies (and sometimes all three) to decide whether they want to lend to you. A higher score lets the lender know you’re a lower risk. They look to see whether you have any defaults, how you payback loans and is you have had any hard credit searches or soft credit searches on your credit report.

Think of it this way - you probably want to see a new movie even more if it has a lot of positive reviews, right? Lenders look at your credit score kind of like a bunch of good reviews in your favour.

Most mortgage lenders will also look at other things, such as your employer, income, if you’re on the electoral roll at your address, and how many payments you’ve missed in the past. They’ll also look at how much money you spend each month on things like debt repayment, childcare, and car payments.

Any loan is a commitment, but things get extra serious when it comes to a mortgage. Since this is such a big loan spread over such a long period of time, mortgage lenders don’t want to take such a big risk. After all, if you can’t pay your mortgage (default) , it’s a huge loss for the lender (a lot more than, say, a missed Klarna payment on some trainers).

You need to be able to show that you will be able to pay your minimum monthly payments even if you change jobs or interest rates increase. So, while your credit score isn't the only important factor when a lender decides if they’re going to offer you a mortgage, it certainly helps to show you’ve been responsible with money in the past. So, no using your rent money to book a trip to Ibiza!

Just remember - the better your credit score, the faster you can say goodbye to your landlord from hell and open the front door to your own home. 

What’s the Minimum Credit Score for a Mortgage?

I guess this is the golden question! But here’s no cut and dry answer to this question because there are at least three different credit scores in the UK. They come from three different companies: Experian, Equifax, and Transunion, all of which calculate your credit score in a slightly different way.

But what is a good credit score?

• Experian – 881 to 960
• TransUnion – 604 to 627
• Equifax – 420 to 465

With a credit score like this, many lenders will offer you a pretty decent mortgage rate. However, if you want an even better mortgage rate, you should try to get your credit score a little higher and into the ‘excellent’ range.

• Experian – 961 to 999
• TransUnion – 628 to 710
• Equifax – 466 to 700

How to Increase Your Credit Score

Desiring to break free from your landlord and secure an attractive mortgage rate? Start by enhancing your credit score. Below, we explore a blend of long-term strategies and quick fixes, each designed to propel your creditworthiness and open the doors to your dream home.

Implementing these methods can gradually lift your credit score, fostering a favorable impression with lenders. Let's take a journey down the path to financial success, beginning with understanding your credit report, paying bills on time, reducing debts, and keeping old accounts open.

However, there's no one-size-fits-all when it comes to improving credit scores. It's a combination of consistent financial discipline over time, paired with savvy moves that can provide immediate boosts. These quick fixes may include disputing any errors in your credit report or decreasing your credit utilization ratio.

Remember, a robust credit score isn't merely about unlocking prime mortgage rates. It's about financial freedom, the peace of mind that comes from knowing you're creditworthy, and the prospect of owning your dream home.

• Take out a credit card but don’t go on a spending spree – While you might think a credit card shows lenders you’re irresponsible, it actually does the opposite. In fact, never taking out any loans or credit cards  can lower your credit score! Lenders can’t see that you’re good with repayments if you don’t have a credit history. The best thing to do is get a credit card and pay it off monthly. 
• A purse full of credit cards? Close them – Having too many open credit cards can make it look like  you’re relying too much on credit, living the ‘fur coat, no knickers’ lifestyle. It’s not enough to just leave them at a zero balance – give the credit companies a call and close any cards you no longer use. 
• Get rid of any existing debt – Create a plan (or work with a credit counsellor) to create a debt repayment plan that gets rid of your old debt as soon as possible. 
• Jump on your local electoral roll – Did you know that just registering on the local electoral roll is enough to boost your credit score? It shows lenders that you’re responsible and your address is up to date. 
• Keep track of your automatic payments – Make sure you use a calendar to track when your payments are due to come out of your account each month. You never want a payment to bounce due to insufficient funds. 
• Loved up?  Make sure your partner works on their own credit score – If you intend to apply for a mortgage with someone you love, make sure they also start working on their own credit score. This is especially important if you share bills and accounts, such as a joint bank account.

How to Get Your First Mortgage

You’re all clued up on your credit score. Now, let’s figure out how to get your first mortgage. Here are some pretty useful suggestions that can help you get away from your landlord and into your own home.

Pay off your debt first

In your hurry to get away from your terrible landlord, you might be socking away all your extra money for your down payment. Of course, saving money makes sense , but getting rid of your debt is a smarter choice. Having less debt will improve your credit score and show lenders that you’re serious about managing your mortgage. 

Save, save, and save

Once you’ve paid off some of your debt, it’s time to really focus on building up your mortgage deposit. We wouldn’t dream of suggesting you cut back on trips to the pub or meals out! But it really does pay to get as much money together  as possible. Not only will a larger mortgage deposit reduce your monthly payments, but it can help you qualify for a better mortgage rate. Meaning you’ll pay less in mortgage payments every month and can use that money to head out on the weekends.

Work out your budget

One of the most important things you can do is to sit down and work out your sums. You need to first think about how much you have for a mortgage deposit, and then figure out how much you can afford to spend on monthly mortgage repayments. Use your preferred lender’s mortgage calculator to check out how much you can afford to borrow and over how long.

 Stay in your current job (for now)

Want to kiss your landlord goodbye? Unfortunately, you can’t do the same to your boss – for now. Lenders like to see that you’ve been with the same employer for at least six months (and even longer is better). That’s why it’s smart to stay at your current position until the ink has dried on your mortgage paperwork. 

Get your accounts in order

Everyone needs proof of income when applying for a mortgage - most people just get their P60s from their employer. However, if you’re self-employed, things get a lot more complicated. Lenders require your full business accounts from the past three years and/or three years’ worth of SA302 forms.

So, how much do you really hate your landlord? Enough to get your credit score sorted, pay down your debts, and save money for a down payment? If so, it’s time to start working on your mortgage application & using tricks like a Lifetime ISA (LISA) that gives you up to £4,000 towards your new house - for free. Before you know it, you can say goodbye and good riddance to your landlord as you move into your new home.