Overcoming Bad Credit: Getting a Mortgage

Bad credit is often thought of as a roadblock to getting a mortgage. Whilst it can be more difficult to secure a mortgage with bad credit, it is still possible.

What is bad credit?

If you have a low credit score, you can be seen as having ‘bad credit’. Your credit score is negatively affected by the following:

  • Missed repayments on loans or credit cards
  • Defaulted on payments
  • Declared Insolvency
  • Significant debt
  • Being served with a County Court Judgement (CCJ)

Why is it difficult to get a mortgage with bad credit?

When applying for a mortgage, you have to meet the affordability criteria set out by a lender to be considered. If you have a bad credit, it may limit the amount of lenders willing to offer you a mortgage.

Typically, high street banks are less willing to accept an applicant with less than favourable credit as it means there is a higher risk factor in terms of repaying the loan. However, there are specialist lenders who are able to look beyond your credit history and assess your circumstances as a whole to find a suitable mortgage product.

How to get a mortgage with bad credit

There are ways to improve your chances of being accepted for a mortgage if you have bad credit. By making some changes, you can improve your credit score before you apply.

  • Add yourself to the electoral role – being on the electoral role can improve your credit score. Lenders can use the electoral role to verify who you are and your home address to avoid fraudulent applicants.
  • Meet all your payment dates for bills – avoid missing any payment deadlines for all bills as this can negatively impact your score. Showing you are up to date on your bill payments can evidence that you can responsibly handle your debts.
  • Close any inactive accounts – if you have any accounts that are open but not in use, it is beneficial to close them. Old accounts can be a potential fraud risk and having multiple accounts that have access to credit increases the opportunity to fall into debt.
  • Check your credit report for mistakes – even small mistakes on your report can impact your credit score so make sure all of the information is correct.
  • Be honest – don’t try to hide any of your credit history. Telling your financial adviser about your full credit history enables them to find a product that is suitable for you. Any inconsistencies will be found during the application process and will only prevent you from getting a mortgage down the line if they are not previously disclosed.

A mortgage is likely to be the biggest financial commitment that you will make, which is why it is important that you get the top deal for you. With the assistance of an expert financial adviser, you can be sure to find the best deal from across the whole of the market.

By taking the time to understand your finances, credit history, and personal circumstances, our advisers can help even those with bad credit find the right mortgage. Speak to one of our advisers today to discuss your options in more detail, please call us on 02921 660 550 or fill in a contact form.