21% of first-time buyers believe they need to be debt-free for mortgage approval

New research from Compare the Market suggests there  is still some uncertainty around how credit cards factor into mortgage applications, with 21% of prospective first-time buyers believing they need to be completely debt-free to be approved for a  mortgage1

The survey findings indicate that around one in ten prospective first-time buyers believe they must never have had a credit card to secure a mortgage, while just over one in five thinks being completely debt-free guarantees approval. The research shows many are taking proactive steps towards homeownership, as 33% say they would  use a credit card responsibly to build credit history, and 37% would check their credit score and correct mistakes  before applying1 

While a majority (52%) recognise that lenders assess overall credit history rather than simply whether someone  has debt, this comes at a time of high public interest in credit reports. Google search data shows there were around 829,000  searches for ‘credit score’ in the past month alone, highlighting how many people are actively seeking to understand how their financial history may affect future plans. 

Credit use itself remains widespread. According to the latest Bank of England Money and Credit data, UK households borrowed £900 million on credit cards in January 2026, up from £800 million in December, while consumer credit overall increased to £1.8 billion. Annual growth in consumer credit also reached 8.0% in the same month. 

With credit card borrowing on the rise, the research has examined common misconceptions about credit and mortgages, explained what lenders tend to look for, and developed the First-Time Buyer’s Credit Checklist to provide practical steps for prospective buyers.  

A common misconception is that having no debt at all guarantees a mortgage approval. In reality, lenders tend to assess a broader financial picture. 

Charlie Evans, Personal Finance Expert at Compare the Market, said “Being debt-free is not necessarily the same as being creditworthy. Lenders typically look at how you’ve managed credit in the past, rather than simply whether you’ve used it. Responsible use of a credit card, such as making payments on time and keeping balances at a manageable level, can help demonstrate reliability.

“For many first-time buyers, the key is preparation. Checking your credit report early, understanding what lenders look for and making small adjustments over time can help you feel more confident when you apply. You don’t need to avoid credit cards if you’re planning to apply for a mortgage. Instead, focus on using credit in a way that shows you can manage borrowing responsibly. Small, consistent steps in the months leading up to an application can make a meaningful difference.  

“Our research shows that while many first-time buyers understand that lenders look at overall credit history, some misconceptions remain about being debt-free or avoiding credit altogether. By taking simple, consistent steps, you  could show lenders you manage credit responsibly and strengthen your chances of a smooth application process.”