• Ordinarily, most banks or mortgage lenders require a credit score of around 650.

• Usually, a higher score means you’re seen as lower risk – the more points you score, the more chance you have of being accepted for a mortgage, and at better rates.

• However, there are other options, such as Right to Buy and Shared Ownership in the UK and Federal Housing Administration in the US which offer differing housing loans for candidates with slightly lower credit scores.

What credit score are Banks and Mortgage Lenders looking for?

There is not a specific credit score for a candidate to be offered a mortgage. When you apply, lenders will consider a whole number of factors, including your credit score, to determine whether you’d be a reliable candidate and for the sort of rates they would be willing to offer you.

However, it isn’t just about your credit score; lenders consider a variety of factors when determining candidate suitability for mortgages. For instance, as well as looking at your credit history they will look at how much you earn, and how much goes out, as a lender wants to see if you can ultimately afford your mortgage before they give it to you.

The same applies for tenants who are looking to rent a property and equally they may need to build up their credit score to be approved.

Other determining factors include regular, fixed costs like childcare, council tax, season tickets and any other outgoings you might have on a monthly basis.

How can you improve your credit score to get a mortgage?

First and foremost, any outgoing payments such as bills or debts should be paid off on time, as your monthly outgoings are one of the main factors considered by lenders when determining your suitability as a candidate.

Secondly, it may seem a little random but simply registering to vote can lead to lenders looking more favourably on your credit report. This is because being on the electoral register helps companies confirm who you are and where you live.

Lastly, try and avoid applying for other loans and credit in the six months before your mortgage application. This is because, each time you apply for credit, a hard search is recorded on your report and too many of these can make it look like you’re overly reliant on loans or credit.

Right to Buy and Shared Ownership Schemes

The Right to Buy and Shared Ownership Schemes are designed to help people from all kinds of backgrounds and financial circumstances to get on the property ladder. This includes people with low incomes, small deposits or less than perfect credit scores.

These schemes are government run and allow you to own a property in part, or maybe a specific council property, in partnership with the government. Small deposits of just 5% are available and you can still benefit if the value of the property goes up over time.

Federal Housing Administration Loans

For an ordinary mortgage, the required credit score is typically around the 650 mark. However, don’t be discouraged if your score isn’t as high as that! The minimum credit score needed to buy a house can vary based on the type of loan.

An FHA loan, offered across the US, is a form of mortgage that is insured by the FHA and issued by a bank or other approved lender.

FHA loans require a lower down-payment than many conventional housing loans, and applicants may have lower credit scores than is usually required.

The FHA loan is designed to help lower or more moderate-income families to attain homeownership and are particularly popular with first-time homebuyers.

According to the Mortgage Reports, 30-year FHA loan rates today start at 4.75% (5.155% APR) for a borrower with strong credit. By comparison, conventional mortgage rates begin at 4.375% (4.397% APR) and offer a similar type of loan