Getting a mortgage with no credit history

A mortgage with no credit history is possible with some UK lenders, but it is harder. Lenders need evidence of how an applicant manages credit, and a thin file offers little. People who have recently moved to the UK, young applicants and those who have always paid in cash are most often affected.

Lenders do not see a score of zero. They see a file with few or no accounts, which their scoring may not be able to rate, so the decision often rests more on income, deposit and other evidence.

A credit score in the app sense is not needed, because lenders use their own scoring. What they need is enough data on the file to assess the application. Without a record of borrowing and repayment, many mainstream scoring models cannot produce a result, and the application may be declined automatically.

Some lenders review thin-file cases manually, and a larger deposit can help, because a lower loan-to-value reduces the lender's risk. Applicants who have moved to the UK may find the expat and foreign national mortgage pages relevant.

Some lenders assess applications through manual underwriting rather than automated scoring. They look at bank statements, income, rent payment history and the deposit, and may accept a thin file where the rest of the application is strong. These lenders are often reached through brokers, and their criteria change over time.

Every regulated residential lender still checks the credit file. A lender that does not score automatically is not the same as one that does not check credit.

A credit history can be built through registering on the electoral roll at the current address, keeping a UK bank account in good order, and using a small amount of credit, such as a credit card, paid in full each month. Rent and utility payments can also be added to some files through reporting services.

A history takes time to build, because lenders like to see several months of on-time payments. Starting well before a mortgage application gives the file time to develop.

A credit card is not the only route. Mobile phone contracts, utility accounts in the applicant's name and some current accounts report to the agencies. Rent reporting schemes, where a landlord or tenant shares payment data, can also add a positive record, although not every lender uses this information.

Opening several accounts at once adds hard searches. Adding them gradually, and only as needed, keeps the file looking stable. The guide to improving your credit score for a mortgage covers the other steps.