How do I get a mortgage if I have a low credit score?

Four tips to simplify the difficult process of getting a mortgage with bad credit

Credit scores are like good reputations – they take a long time to build and a moment to ruin. Forget a utility payment or pay a mobile phone bill late, and your credit score takes a leap down. And if you’ve been a paragon of financial virtue and never had a loan or credit card, then you might have a credit score of zero!

There are so many reasons why you might have a low credit score it would take a book, not an article, to describe them all. Whichever it is, a high street bank is likely to run you down for a mortgage if you have a poor credit score. Their computer will say no.

If this sounds like you, then these four tips will help you get the mortgage you need to buy the home you deserve.

What is a low credit score?

Before applying for a mortgage, you should check your credit score with the main credit reference agencies. This is free to do. Simply go to the agency’s website, register, and order you credit score. The main credit reference agencies in the UK are Experian, Equifax, and Callcredit.

Understanding what a poor credit score is can be a complicated process. Each credit reference agency scores differently. Each lender references good and bad differently. But, as a general rule of thumb, a bad credit score is:

  • Below 650 at Experian and Equifax
  • 1 and 2 at Callcredit (which uses a 1 to 5 rating)

Tip #1: Understand your credit score

The first step to getting a mortgage is to understand why your credit score is low. The main factors in a credit score calculation are:

  • Payment history (35%)
  • Balances owed (30%)
  • Length of credit history (15%)
  • Credit applications (10%)
  • Credit mix (10%)

Tip #2: Correct any errors on your credit report

It is not uncommon for errors to appear on your credit report, so if you find any you should have them corrected before making a mortgage application. To do so you will need to contact the credit reference agencies and your creditors, tell them about the mistake, provide evidence to support your claim, and ensure it is corrected.

Tip #3: Use a specialist mortgage broker

High street banks and mainstream lenders don’t like lending to people with bad credit scores. They are more risk averse than Jose Mourinho. But there are lenders that treat borrowers with bad credit as more than just a number.

In a recent article, I wrote about six of the best bad credit mortgage lenders. These are probably companies you have never heard of. That’s understandable. Most specialist lenders only deal with people through a specialist mortgage broker, like Mortgage Thoughts.

Tip 4: Let the mortgage broker take the strain

Each bad credit mortgage lender has different capabilities, criteria, and areas of bad credit specialisation. The mortgage broker will discuss your needs and credit circumstances with you to fully understand your situation.

Then, on your behalf, they will search the mortgage market for you – including the high street lenders. It’s a stress-free process for you, saving you hours of time, and ensuring all potential lenders are assessed on your behalf – including those elusive specialist bad credit lenders.

It’s not easy to get a bad credit mortgage, but it couldn’t be simpler!

Whatever the reasons for your low credit score, you may still be able to get a mortgage. If you are in a bad credit position, contact Mortgage Thoughts today, and let us help you. You’ll be surprised what options may be open to you – we know where to find them.

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