Let’s answer the big question right up front: yes, there is a possibility you can, but it might be harder to find a lender prepared to take you on, and it will depend on a variety of factors in regard to lender’s criteria and the precise situation contributing to your poor credit score. In extreme cases, you might have to wait for adverse credit events to disappear from your credit report – that takes six years, but will boost your credit score.
Why can a poor credit score make it harder to get a mortgage?
When you apply to borrow money, whether in the form of a personal loan, credit card, mortgage or anything else, lenders assess the risks in your ability to repay the funds as agreed within your terms. If they believe the probability of the funds to be repaid is good, they’re likely to say yes, and possibly give a preferential rate of interest when compared to that of an applicant with a proposed higher risk. The tool they use to assess risk is a credit score.
What is a “credit score”? How is it calculated?
Your credit score is an accumulation of information regarding predominantly two things: personal identity and financial conduct. Lenders want to be confident you are who you say you are and to understand how you manage your finances.
They’ll check your details with a credit reference agency. The agency checks the electoral roll, plus payment information shared by other companies. Each item is given a rating, depending on how important they consider it to be, and the result is your credit score. If you have a chequered financial history, the chances are you will have a poor credit score.
How can I get a mortgage with a poor credit score? What mortgages are available?
When you’re looking at how to get a mortgage with a poor credit score, whether you’re a first-time buyer or a homeowner looking to move, high-street lenders may not be able to assist. They can have a more rigid approach, rather than assessing each case on merit. Seeking advice from an expert mortgage broker could be your best option.
Make sure you have enough money saved, so you can cover the deposit. If you’re able to put down, for example, a 15% deposit rather than 10%, that could be of benefit when being assessed. Remember there may also be fees and other expenses to pay.
Finally, there isn’t actually any such thing as a “bad credit mortgage”, only mortgages that cost more or less, depending upon your credit score and the perceived risk to the lender. However, if you’re looking at how to get a mortgage with a poor credit score, you probably have to accept that it may cost you more.
What other steps can I take?
There are several things you can do to improve your chances of getting a mortgage with a poor credit score. Probably the top three, and the quickest and easiest, are:
- Make sure you’re on the electoral roll – it helps prove identity.
- Make sure your accounts are paid up to date – and keep on top of them.
- Check your credit records are accurate – request copies from all three UK credit reference agencies.
For more detailed, practical advice, read our article on how to improve your credit score.
How Just Mortgage Brokers can help
At Just Mortgage Brokers, we have a team of specialist advisers with many years’ experience of helping people with a poor credit history get a mortgage deal. Our brokers can also access deals that aren’t available on the high street. Taking professional advice is a good move if you’re wondering how to get a mortgage with a poor credit score. Initial help and advice costs nothing, so contact us today to discuss how we can help.