Steps to getting a mortgage with a bad credit score

It is possible to get a mortgage when you have a bad credit score, but it will be harder for you than for people with a good credit history. Here are some steps to get the process started.

Step one: Check what your credit score actually is

In some cases, your credit score might not be as bad as you think. Being rejected for credit in the past doesn’t necessarily mean your rating is too bad to get a mortgage. And even if you have had a mortgage application rejected, it doesn’t mean you will be rejected by all lenders.

Every lender you deal with will have a different criteria for lending money, so there’s not one firm rule to say what a ‘bad credit score’ is. That means what one lender deems to be too poor may be absolutely fine for another.

It’s therefore a good idea to understand your credit situation properly so you have a better idea how lenders may view you so you can act and prepare accordingly. We recommend using CheckMyFile to get your credit report where registration is free for the first 30 days, with a £14.99 monthly fee thereafter, so remember to cancel before the month ends! You can register to get your report here.

Once you have this report, get in touch with us and one of our mortgage advisers will be able to review your circumstances and advise you personally on your next best step. You can start the mortgage process and book a free appointment here.

Step two: Rebuild your credit score

Once you’ve checked your credit score, you might need to take steps to rebuild it. Lenders are looking at your credit history to see how well you can manage your finances, so you need to give them evidence that you can budget sensibly and afford any repayments. Here are a few things you can try: 

  • Meet all your regular payments on time and in full. You need to show them that you are a responsible borrower and proving you can meet repayments will go a long way to helping that. 
  • Make sure you are on the electoral role and that all of your addresses are up to date. This will add points to your score and if things are not up to date, it will be difficult – and possibly unlikely – that the lender will have enough information to progress your application.
  • Particularly for the months running up to your next mortgage application, try to reduce your spending and keep your monthly outgoings consistent. Lenders will look at your outgoings and savings to assess how financially responsible you are, so if you’re able to have money left over at the end of each month this will paint you in a good light. 
  • If you have a good reason for past financial struggles, you could look to apply for a ‘note of correction’ which would get added to your credit report for lenders to see. Potential reasons that could be accepted include a historic illness or redundancy.
  • Check your eligibility for a mortgage with one of our mortgage advisers. If your credit rating is borderline, there may already be lenders willing to accept you with the deposit amount you have saved. It’s worth checking this up front as it may mean you can buy your home quicker than you expected. You will need to sign up via this link and then you will get access to our online calendar where you can book a free appointment directly.

Step three: Speak to a mortgage adviser

If you haven’t already, now is the time to speak to a mortgage adviser for some bespoke advice. They will be able to review your personal situation and give you tangible actions that’ll give you the best chance of getting approved for a mortgage. They will be able to look through your credit history in detail and then discuss any problems they find with you so you can both agree what option is best for you.

For example, they may recommend for you to work towards building a bigger deposit – maybe around 20/25% of the property value rather than the usual 5/10%. Because mortgage lenders view low credit as more of a risk, a higher deposit could work to negate some of this risk and result in your mortgage application being accepted.

Alternatively, they could recommend you try applying for something called an adverse mortgage instead. This would be a last resort because they’re likely to come with higher interest rates and there could be a lower limit on how much you can borrow, however it might be the right thing for you personally.

Ultimately, everyone has different circumstances and will need different things, so there’s no one-size-fits-all recommendation we could give you in this article. It’s best to speak directly with an adviser so they can give you a bespoke recommendation that is truly in your best interests.

Just remember, you should only look to get a mortgage if you are confident you can keep up with the repayments. If you do not keep up with the repayments, your home can be repossessed.

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