FRIDAY FEATURE: Getting a Mortgage With a Low Credit Score

Topical Mortgage News and Rates

This month, Independent Mortgage Adviser, Chris, discusses how it may still be possible to get a mortgage with a low credit score + tips to improve your score before applying. Read more, including this month’s BEST RATES, here.

This does not constitute advice and advice should be sought in all instances before acting on it.  Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. 

The importance of a good credit score

Banks and lenders these days are naturally wary about who they lend money to.
Their own internal processes dictate that financial history needs to be assessed without exception, as part of the application process.

By looking at your financial history, a lender can see how responsible you are when it comes to money.
Most importantly for them, they want to see that you have a good habit of borrowing and repaying money at the time it is due.
Subsequently, a poor credit history can go against you if you are applying for a mortgage, loan or other credit facility.
Lenders will also look at things like County Court Judgements (CCJ’s) or evidence of bankruptcy, to get a full picture about your attitude to credit and your financial history.

Is getting a mortgage with a low credit score possible?

The short answer is, yes. Some lenders are more lenient with lending to hopeful homeowners with a poor credit score.
Working with a mortgage broker can help to connect with these specific lenders that are known to offer such mortgage products.
If you do have a low credit score, the interest rate or fees could be higher than a regular mortgage arrangement. Here the lender is simply protecting the added risk they are taking from lending to someone with a history of poor financial management.
A large deposit can help to counter balance larger monthly payments.

Helping your credit score

Request your own credit score from companies such as Experian, Equinox or CallCredit, to name a few.
Understanding your credit score in advance of applying for a mortgage can help you to plan ahead and be prepared for all situations. 
There are simple ways to improve your credit score, these include:

• Check your credit score – if you don’t know then it is hard to correct it!
• Ensure you have account history – having a credit card and using it well, can be more beneficial for your credit score than not having one at all.
• Don’t withdraw cash from a credit card – this goes against your credit score
• Register your address on the electoral
• Ensure your address is current for your utility bills, bank and across the board
• Don’t miss payments – for your credit card, or any other credit facility, as this shows poor financial management
• Don’t keep applying for credit if you get turned down – the number of times credit is declined shows on your credit history
• Don’t keep unused cards – if you are no longer using a store card or credit card, then it is best to cancel it and cut the card up. Then the lender can accurately see how much credit you have available.

Mortgages for Doctors and Dentists – Best Rates

If you are looking to move house, or buy an investment property in the near future, keep an eye out every week for our Mortgage Monday – updated rates and best deals, including 95% mortgage options for first-time buyers.
Sample best rate mortgages:

Read more of Chris’s monthly mortgage features:

• Low rates are important but so are low fees
• Save money with an offset mortgage
• Should you overpay your mortgage whilst interest rates are low?

Get a mortgage review with Chris
If you would like us to undertake a review of your current mortgage deal or you are thinking of purchasing in the near future and require funding, please contact Chris for a free, no obligation appraisal.
 
Tel: 01403 780 770
 
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