Low Credit Score? Need Help Getting a Mortgage?

When you apply for a mortgage, the mortgage lender will decide whether to lend you the money based on how much of a risk you are. Therefore unfortunately, a bad credit history is a warning sign to most lenders. However, this doesn?t mean that you won?t be able to get a mortgage. There are mortgage providers out there that will consider applications with lower credit score and there are many ways you can improve your credit score in order to give yourself more choice of lenders.

How does Credit Score Relate to Borrowing?

Your credit record is the history of all your debt repayments from various sources including banks, credit cards and finance agreements. Your credit score is a number which is worked out based on your credit history and other information, it is used by lenders to determine how likely you are to repay a debt.

Factors which can lower your credit score:

  • Missed or late payments

  • County Court Judgements for not paying bills

  • Lack of credit history

  • High level of debt

  • Applying for a lot of credit at one time

  • Being connected (e.g. through a joint mortgage or bank account) to someone with a bad credit rating


When it comes to securing a mortgage, if a lender is not happy with your credit score they may restrict your borrowing, offer a higher interest rate or decline your application.

Factors which can increase your credit score:

  • Owning a house or living at the same address for more than a year

  • Being on the electoral register

  • Paying bills and credit agreements such as credit card repayments on time

  • Have the same job for a number of years

Challenges for those with Bad Credit

Rejection

When it comes to securing a mortgage, if you apply to a lender and they are not happy with your credit score, they may reject your application altogether leaving you with frustrating task of searching for more potential lenders and repeating the application process.

Restricted Borrowing

Mortgage providers may agree to lend to you but offer less borrowing than you require. Unless you can find additional funds or negotiate a lower buying price, sadly this can leave you unable to complete your house purchase.

Higher Interest Rate

The most competitive interest rates will require a good credit score. Often the rate advertised will be a representative APR. This rate will not be offered to everyone and with a low credit score your personal APR could be much higher.

How get a Mortgage with Bad Credit

Getting a mortgage offer or the most suitable mortgage deal is not easy if you have a low credit rating, so what can you do to help:

  • Use a credit checking agency such as Experian to see your credit report.
  • Check the report thoroughly for any mistakes which could be lowering your score.
  • Consider trying to boost your score before applying for a mortgage - for example, ensure are on the electoral register, make sure all your bills are paid on time, or if you have a lack of credit history, start using a credit card and repaying the balance in full each month.
  • Save, save, save - the more deposit you can find, the better. Ideally you will need at least 15% deposit in order to find a lender who will be flexible enough to consider someone with bad credit.
  • Contact a mortgage broker who can search for a mortgage lender who will consider applications from someone with your credit score.
  • Work to maintain a good credit score. Even when you have a mortgage your lender will regularly check your credit score which could result in a rise of interest rate.

Mortgage Brokers May Be Able To Help Those with Low Credit Score

Mortgage brokers have in depth knowledge about a wide range of lenders including specialist lenders that are willing to consider application from those with lower credit scores. Each lender is different and will have their own criteria for who they can help. A mortgage Broker can help select the right lender to give you the best chance of having your application accepted. We can select specialist bad credit lenders who will assess your credit report fairly, taking a more sympathetic approach to your application and understand for example, that some missed payments in the past have a reasonable explanation. A Mortgage Broker can save you the stress of applying and being declined by numerous lenders. We will work hard to find the most appropriate lender for your circumstance to give you the best chance of securing the mortgage you need.