Having a poor credit rating can make getting a mortgage more difficult. However, it is not impossible to get approval for a mortgage even if you have a poor credit score.
With the appropriate mortgage advice, which might involve taking steps to improve your credit rating, you may be able to secure the kind of mortgage you need.
Reasons for Poor Credit
Sometimes, just missing a few bills can be the reason why your credit rating is poor. In fact, some mortgage applicants are surprised to learn that they have poor credit because they have forgotten to pay the bills on time in the past.
Here are some potential reasons that may lead to you being refused a mortgage due to your credit score:
• You have been late paying credit card bills in the past or have outstanding unpaid bills
• You have been declared bankrupt or have a debt management plan
• You have County Court Judgements against your name
• You don’t have any credit history which makes it difficult to prove your reliability
Getting a Mortgage with Poor Credit
Here some practical ways that you can improve your credit rating, which may in turn boost your chances of being accepted for a mortgage.
Check your credit score
Usually, before applying for a mortgage, it is a good idea to check your credit score. This can help you see where improvements can be made to your credit rating.
Each person the United Kingdom has a legal right to request their credit report. This will help you build an accurate picture of the reasons why you have poor credit. It also gives you the chance to check for errors on the credit report and rectify them.
Prove you are reliable
Lenders take a risk when they lend money. Proving that you are reliable helps lenders minimise their risk. For example, it may be helpful to pay off, or start paying off, any outstanding debts that you currently have and make sure that your credit cards aren’t at their full limit.
Another way that you can prove your reliability in paying back debts is to pay the full amount each month on credit cards. Applying for a standard credit card that is specifically for those with bad credit can be a helpful way of ensuring you can make regular monthly payments to the card and have the balance repaid at the end of a set period.
Apart from paying off your credit cards, it may help to reduce your risk in the eyes of lenders if you cancel any credit cards that you no longer use.
Be on the electoral register
Being on the electoral register can slightly boost your credit rating. This is because it makes it easier for lenders to carry out certain checks and prevent fraud.
Credit rating of your spouse
Even though you may have a great credit score, you could be refused a mortgage if your spouse has bad debts or a poor credit rating. If you no longer live with your spouse, you should seek financial advice on how to remove their poor credit rating from your report.
Even though it can take some time to improve your credit score, it is still possible. You can improve your poor score credit and increase your chances of being accepted for a mortgage to buy the home of your dreams.
