Bad Credit Mortgages

What is bad credit?

Bad credit can range from having late payments on credit commitments, having defaulted on previous credit commitments to having county court judgements through to bankruptcy.

Can you get a mortgage with bad credit?

The majority of the high street lenders prefer borrowers to have a good credit history. They can obtain the information about your payment history from credit reference agencies and like to see that you have maintained on time payments and haven’t fallen behind on your financial responsibilities.

High street lenders generally have the best rates for customers with a strong credit score. Some will allow you little blemishes, but generally they prefer you to have a clean credit record. There are also more specialist lenders, who allow you to have certain elements of bad credit, but their rates are a little bit higher.

There are lenders that will accept applicants with county court judgements, defaults and even debt management plans. It’s just a case of finding the right lender that will accept your application, at the best rate.

How do I know if I have bad credit?

Something as small as a mobile phone bill can leave you with poor credit history, perhaps, if you forget to pay the final bill or similar circumstances. Sometimes people don’t realise that they’ve had blemishes on their credit file. It’s important to check your credit score with a credit reference agency directly, before you apply for a mortgage. You can do this online with any of the major credit reference agencies.

How can I improve my credit score?

If you have a low credit score, it’s likely to be because you’ve had late payments or defaulted on an account. The mark on your file for this type of issue generally stays with you for at least six years.

If you have had bad credit in the past, try to run your accounts in an orderly fashion, because the longer ago the issues occurred, the more chance you have of being considered for a mortgage. A lot of people may not realise that every loan or credit card payment is documented on their credit report, so it’s important to bear that in mind if you’re planning to get a mortgage.

Can you get a mortgage with a 500 credit score?

There are three major credit reference agencies, Experian, Equifax and TransUnion, all of whom use different scoring systems, so the scores only mean anything to the actual credit reference agencies. A score of 500 may be good with one and bad with another agency.

Mortgage Lenders have their own internal credit scoring system. They will use these credit reference agencies to get all the information that they need, but use their own internal credit scoring system. The credit score in terms of the actual figure, is therefore not a good indicator.