Whilst a stable employment history, good salary and large deposit are all good starting points when applying for a mortgage, your application is still likely to be refused by many lenders if you have a poor credit rating.
A bad credit rating might include a County Court Judgement (CCJ) against your name or previous defaults on debt repayments. If you have been bankrupt in the past then this will also be included on your credit history and is likely to be detrimental to a successful mortgage application.
Of course, there are sometimes exceptions and several lenders specialise in what are generally acknowledged to be higher risk loans to applicants with a poor history of debt default, bankruptcy or CCJs. Unfortunately, the reasons behind your bad credit history are generally of little consequence to the lender and whilst this might sometimes be unfair, it is likely that if you have a poor credit rating your options for borrowing will be limited and the cost of borrowing will be more expensive.
If you have a poor credit rating you may be required to find a larger deposit than otherwise and pay a higher interest rate than would otherwise be the case.
To check your credit rating various third parties will undertake a check on your behalf. You can check your own, free of charge at www.noddle.co.uk, which we would always advise everyone to do before they consider their mortgage options.
Simple ways to improve your credit score include making sure that you are registered on the electoral roll and that you don’t miss credit card or loan repayments.
The good news is that more and more lenders are coming back into the “adverse” market and rates are definitely becoming more competitive.
You may also find our Blog article of interest; 'How to Improve Your Credit Score'.
For more information or to speak to a mortgage adviser contact us on 01628 507477.
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