Bad Credit Mortgages Explained

Having a bad credit rating can be stressful, but it makes it all the more disappointing if you’re unable to apply for a mortgage as a result. Lenders will always run a credit check on applicants and can often be reluctant to lend you money when there’s a bad credit score.

Reasons for their rejection may include:

  • you’ve previously missed repayments on debts owed
  • it’s irresponsible lending to put you in further debt
  • lack of guarantee they’ll get their mortgage payments
  • there’s a recent County Court Judgement (CCJ) against your name
  • you have a history of bankruptcy

It’s not impossible to get a mortgage if you have a bad credit rating, especially if you get professional advice and help, but you may need a larger deposit or have to pay higher interest rates.

What can I do?

The first step is always to try and improve your credit score, and there are lots of little ways you can do this including ensuring you’re on the electoral role, closing credit card accounts that are unused, as well as seeking advice to take control of your debts to ensure they’re manageable. This is not a quick process, so put in the work now to improve your rating before you apply for a mortgage.

It’s also sensible to get a copy of your credit file and check it contains all your relevant information which may help such as your full address. Ensure there are no errors on the report and ask them to add a notice of correction if you think anything on there is incorrect.

If you’re concerned, you may also be able to get an adviser to look further into your credit files as your score may not be based on missing repayments. If you can prove you can handle debt well despite your credit score taking a hit, this may make things easier. Your score may be lower due to a phase of rejected applications for example, and you may be better off waiting to apply in this case as timing can help with bad credit mortgage applications. Certain black marks on your credit history carry more weight than others with mortgage lenders.

Remortgages

People often look to remortgage their home when they want a better deal elsewhere. However, having a poor credit score often means you’ll be unable to get one if you’ve got a history of missing debt repayments. You should also consider that it may not be worth switching if your credit rating means a high interest rate is applied. In this case, you’ll be better off sticking to your current deal anyway. Seek advice if you’re looking to remortgage with a bad credit score.

When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.

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