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Mortgage with no credit history

Last updated on 7th October 2023 by Martin Alexander

Applying for a mortgage with no credit history is a risk, as most lenders require borrowers to have a credit file. That being said, there are ways to get a mortgage, which we’ll explore in this guide.

Can I get a mortgage with no credit history?

Yes, getting a mortgage with no credit history is possible, but it’s far from easy. This is because lenders can’t assess how you’ve managed your finances, such as paying bills. This puts lenders in a difficult position, as they can’t assess the risk involved in lending to you.

Lenders use credit history to help make lending decisions and prefer applicants to have a credit history for this reason. You may have a credit history that you’re unaware of. No matter how small your credit file is, any amount of history can help.

If you have a thorough credit file, lenders are able to check your financial conduct and whether or not you’ll be high-risk. Having little or no credit history can leave lenders with doubts, as they simply can’t assess how you’ve handled borrowing in the past. If you’re unsure whether your credit file is adequate for a mortgage, you can make an enquiry with an advisor.

Why might I not have any credit history?

Each time you take a loan, creditors will keep a record of how you’ve repaid the loan. This is ultimately how your credit history is collected, but there are cases where you may not have any credit history.

Reasons for having no credit include:

  • Living with parents – Without having bills in your name or a record of your rent contributions, you won’t be able to build your credit history.
  • Not registered on the electoral roll – Being registered on the electoral roll is a must, as failing to do so can result in having a sparse credit history.
  • No employment history – The more employment history you have, the better, but a lack of employment may leave you off the credit radar.
  • You’ve never used credit – If you’ve never used a credit card or taken a loan, there isn’t any lending or borrowing that credit reference agencies can report on.
  • No UK bank account – Opening a UK bank account can kickstart your credit file, but having too many open bank accounts can be bad for your credit score.
  • Lack of UK address history – Lenders love stability, so having a long-term address can be great for your credit file, but moving around frequently could leave you with no credit history. If you’re new to the UK, you’ll have to build your credit history from scratch, as your credit file can’t be used from another country.
  • You’re under 21 – It’s understandable that you’re less likely to have a big credit file if you’re under 21. There are credit cards that help with building your credit score, which can help those who are starting out.

How to get a mortgage with no credit history

If you have no credit history, it will be extremely difficult to get a mortgage without the help of an advisor. You’ll also need to check your eligibility for a mortgage before applying. This is because you’re likely to be declined without having a credit history, which could impact your credit situation further.

You can improve your chances of getting a mortgage by taking the following steps:

  • Start building a credit history – There are many ways to build your credit rating, which we’ll explore further in this guide. You can build enough credit history in a matter of months to get a mortgage.
  • Speak to an advisor – You won’t know if you’re eligible for a mortgage without speaking to an advisor. Your advisor can then further guide you on what to do to build your credit before applying for a mortgage.
  • Download your credit reports – A copy of your credit file will give you an idea of what’s being added. Provide your reports to an advisor who can check whether your credit file is adequate for a mortgage.
  • Apply with a suitable lender – Only a handful of lenders will consider applicants with little credit history. Nonetheless, you must ensure you meet the rest of their criteria.

Do I need a credit card for a mortgage?

A credit card isn’t absolutely necessary if you’ve had at least two lines of credit, such as a phone contract and a registered bank account.

Two lines of credit should give you enough credit history to get a mortgage. That said, each lender has its criteria, so it’s always worth checking with an advisor beforehand.

If you approach a lender without an advisor, you risk being declined. Any application for credit, including a mortgage, will leave a footprint on your credit file. If you’ve just started building your credit history, the last thing you’d want is a failed application.

What can I do to build my credit rating?

Building your credit rating can seem timely, but this isn’t true. Credit for six months is usually enough to strengthen your credit file for a mortgage. Building a credit rating doesn’t mean you’ll need to take on heaps of debt to repay it.

  • Get a phone contract in your name – Paying your phone bill monthly is an easy and inexpensive way to start building your credit history. Set up a direct debit to ensure payments are never missed and repaid in full. Better still, make your payments with a credit card to build your credit faster.
  • Open a credit card – A simple way to build your credit score is to open a credit card. Paying credit cards in full with a monthly direct debit is advised. By doing this, you’ll never be at risk of late payments, which can damage your credit score.
  • Register to vote – One of the fastest ways to kickstart your credit file is by registering on the electoral register. This can provide you with an address history used for your credit file. You can register to vote here.
  • Open a bank account – Start managing your finances, such as repaying your credit card in full each month. Having an account also allows you to make payments in your name, which you’ll need to do to build your credit file.
  • Limit your credit applications – This can sound contradictory, but applying for lots of credit in a short space of time can cause damage to your credit history. This is because it can appear as though you’re struggling financially. Space your credit applications apart to avoid this from happening.
  • Place utility bills in your name – Young people commonly have little or no credit history, especially when living with parents. You may be able to place a utility bill in your name to help strengthen your credit file.
  • Limit your debt – Be sensible with your credit card and ensure your total debt is below 45% of your annual income. This is because when lenders assess your mortgage application, having too much outstanding debt will go against you.

Remember, credit is just one area of your assessment. Our specialist advisors are experienced in mortgages under difficult circumstances. If you wish to apply for a mortgage, you can make an enquiry below.

About the author

Martin Alexander
Senior Mortgage Advisor

Martin is a senior mortgage advisor who has held a CeMAP qualification for over 15 years while completing an MBA in Global Banking and Finance.