How to get a mortgage with bad credit

17/08/2022

Life has its ups and downs, and even the most money-savvy people can find themselves experiencing financial hardship for one reason or another. So, there really is no reason to be ashamed of a bad credit score. You may be asking yourself, however, “can I get a mortgage with bad credit?”

You may be worried that your adverse credit will put the brakes on your goals of homeownership, remortgaging or moving house. To try and ease your concerns, we’re going to be taking a look at the ways in which an adverse credit score can impact your chances of securing a mortgage, and what you can do to ensure that you’re still able to get a deal that works for you.

What is bad credit?

Having ‘bad’ or ‘adverse’ credit means that you have a low credit score.

You may have bad credit for a variety of reasons. Typically, a poor credit score is due to missed repayments on loans or credit cards, or failure to pay bills on time.

You may have a bad credit score if:

• You have a large amount of debt
• You have recently declared bankruptcy
• You’ve previously defaulted on payments
• You have missed repayments on other loans
• You’ve been served a County Court Judgement

What if you have no credit history?

Alternatively, you may also lack any sort of credit history altogether.

If you have never taken out any form of credit or loan in the past, it is likely that you do not have a credit history. This can make it difficult for credit reference agencies (CRAs) to assess you, and in turn, results in a low credit score.

If you find yourself in this situation, you may benefit from speaking with a trusted financial adviser, who can advise you as to the ways in which you may begin to build your credit score.

Can you get a mortgage with bad credit?

Put simply, yes. You can absolutely secure a mortgage with a bad credit score.

While it is true that a strong credit report will position you favourably with lenders, the notion that having poor credit will automatically disqualify you from securing a mortgage is a myth.

It will likely, of course, be more difficult for you to get a mortgage with a bad or low credit rating. This is because lenders will look at your credit history to see whether or not you will be able to make repayments, and past instances where you have not been able to meet repayments on other loans will make lenders sceptical as to whether you are likely to be able to manage your mortgage repayments.

If you have a poor credit score, securing a mortgage is entirely possible, but you may have to make some compromises. Typically, lenders will offer applicants with adverse credit mortgages higher rates, or ask for a larger deposit than they would from customers with clean credit. However, if you have a good income and a healthy deposit, it’s very possible to access competitive deals.

The best action you can take if you think you may have a bad credit score is to speak to an experienced financial adviser. Here at B-Advised, we are well versed in helping individuals with adverse credit secure a mortgage. It’s our job to carefully assess unique circumstances and to advise accordingly as to what course of action is best. Over the years we have helped many individuals to secure a mortgage in spite of adverse credit, and can certainly do the same for you.

What can you do to strengthen your credit score in the short term?

If you have had a mortgage application declined, it’s smart to take some small steps toward improving your credit score before you apply again.

Your credit score accrues slowly over time, however, there are some actions you can take to improve your score in the short term. These may include:

• Ensuring you are on the electoral roll by registering to vote
• Analysing your credit report and correcting any mistakes, such as incorrect addresses
• Cancelling any unused credit cards or bank accounts
• Ensuring you meet all of your bill payments on time, such as phone, utilities and internet bills
• Paying back any loans wherever possible before applying for a mortgage

Concerned about your chances of securing a mortgage with a bad credit score? Our specialist advisers can help. Simply get in touch today.