Can I get a mortgage if I have a bad credit score?
When applying for a mortgage most lenders will carry out a credit check, this will bring up any bad credit you may have had in the past. Bad credit can affect anyone sometimes divorce, illness or life events happen, we can’t control these, and it can have a big impact on our finances. When you miss a payment or get a CCJ a mark is left on your credit report, this is to indicate to anyone looking that you may be higher risk or have had previous issues with debt. The more time that has passed since your credit problems, the more likely you are to be able to get approval for a mortgage.
Each lender is different; some high street lenders will decline applications with as little as a missed payment in the last few years while others may look past this. Some will take into account the amount of debt and how long ago it was when considering your application. There are also specialist lenders that our brokers work with that are not as well known as the high street banks but are more willing to consider applications from customers with a history of bad credit. These lenders tend to be more flexible with customers and provided affordability is met there are many lenders out there with less strict criteria than certain high street banks.
Lenders that tend to be more flexible with previous credit issues tend to offer higher than average rates; this is due to the additional risk they are taking on your application, they also (in most cases) require at least a 20% deposit before they will consider lending.
Get Free Advice
Should I Run A Credit Check?
It is important to know exactly what lenders will see when they are running a credit check on you. It is worth taking a free trial of the three credit reporting agencies that the banks use to ensure that your credit reports are fully up to date. You don’t want to apply and then find out you have been declined due to an error or oversight on your credit report.
The Credit Agencies Banks use are below
It is worth noting that if you are applying for mortgages and being declined other lenders will see this, it is best to not apply to lots of lenders as lots of negative searches will have an impact on your credit score.
When looking at your credit report if you see things that are wrong, for example, if you have outstanding credit, but you have paid this off you need to ring the credit agency so they can rectify this as satisfied debt is a lot better than unsatisfied debt.
If you are using a specialist broker, they will be able to assess your circumstances and credit report. A broker will be able to tell you if you are going to be eligible for any deals or whether it may be best to wait until certain marks drop off your credit file before applying. Marks stay on your credit report for six years, after this lenders will be unable to see them.
What Affects My Credit Score?
Below are some of the main issues that lenders will be looking at before deciding to approve or decline your mortgage application. Having one or more of the below doesn’t mean that you won’t be able to secure a mortgage, but it is more likely that you will be able to get approved using a specialist broker who has relationships with lenders that specialise in bad credit lending.
County Court Judgements
A County Court Judgement is a court order that is made in the UK and can be registered against you, or a company if payments on any credit commitment aren’t made. A CCJ within the previous six years can affect the chances of having a mortgage application approved. Your mortgage adviser will have successfully negotiated mortgages for clients with CCJs regularly. Make sure you speak to us before incurring any costs associated with a property purchase.
This usually occurs if you miss three or more payments on a credit agreement. This adversely affects your credit history. Your mortgage adviser has come across this situation many times when arranging mortgages; they will know the best place to go to arrange your mortgage. Contact us now for information on how to get a mortgage when you have defaults.
An individual voluntary arrangement is an agreement with your creditors that enables you to make a single monthly payment towards your debts some of which is usually written off. An IVA adversely affects your credit history. Your mortgage adviser has come across this situation many times when arranging mortgages; they will know the best place to go to arrange your mortgage. Contact us now for information on how to get a mortgage when you have an IVA.
Usually, the last resort if your debts have become too much for you. If you have a bankruptcy on your credit file, this adversely affects your credit history. Your mortgage adviser has come across this situation many times when arranging mortgages; they will know the best place to go to arrange your mortgage. Contact us now for information on how to get a mortgage when you have been bankrupt.
Late or missed payments
If you have missed or late payments on your credit file you may find some lenders refuse an application for a mortgage. This adverse credit history does not mean it is impossible to get a mortgage. Your mortgage adviser has come across this situation many times when arranging mortgages; they will know the best place to go to arrange your mortgage. Contact us now for information on how to get a mortgage when you have late or missed payments history.
How To Improve Your Credit Score
If you find that you cannot get a mortgage even through one of our specialist mortgage brokers, then you will need to consider improving your credit score before reapplying. This will allow lenders to see that you have sorted out your finances and are repairing your credit report.
Some ways you can improve your credit report
- Fix any mistakes
- Ensure you register on the electoral roll
- Use a credit card and pay it off each month
- Ensure you make all payments on time
- Set up a monthly budget to pay off any existing debt
- Give it time – adverse history won’t stay on your credit report forever.
Specialist Bad Credit Mortgage Lenders
With a continually growing population, the amount of people with bad credit continues to rise. With more of the high street lenders moving towards only wanting to lend to customers with no history of credit issues, reliable income and large deposit this has grown the market for specialist lenders. This can be seen as positive for customers with bad credit as with ever-increasing demand and more lenders moving into these specialist areas the competition is increasing meaning lenders are now having to be more competitive with their interest rates. This is allowing customers with bad credit to get better rates than ever before.
Speak with one of our specialist mortgage brokers today, with a wealth of knowledge on bad credit they are best placed to help you get the mortgage you require.