Bad credit can make it difficult to get a mortgage, but it’s not impossible. There are several things you can do to improve your chances of getting approved for a mortgage with bad credit.
What is Bad Credit?
Bad credit is a term used to describe a person’s credit history when they have made late payments, missed payments, or have defaulted on a loan. It can also refer to a person’s credit score, which is a number that lenders use to assess someone’s creditworthiness. A low credit score can make it difficult to get approved for a loan, and can also result in higher interest rates.
There are a number of things you can do to improve your credit score, and in turn, your chances of getting approved for a mortgage.
1. Check Your Credit Score
The first step is to check your credit report and ensure that all the information is accurate. You can get a free copy of your credit report from one of the UK’s credit reference agencies: Experian, Equifax, or Callcredit. Or get all 3 reports with Check My File which is free for 30 days then £14.99 a month – cancel online anytime.
If you find any errors on your credit report, you can dispute them with the credit reference agency.
2. Make Your Payments on Time
One of the best things you can do to improve your credit score is to make all of your payments on time. This includes credit card payments, utility bills, and any other type of loan or bill you may have.
If you have any late payments, try to make them as soon as possible. The sooner you make the payment, the less it will impact your credit score.
3. Use a Credit Builder Card
Another way to improve your credit score is to use a credit builder card. This is a type of credit card that is specifically designed to help people with bad credit.
Credit builder cards work by giving you a small line of credit, which you can use to make purchases. As you make your payments on time, you will gradually improve your credit score.
4. Get on the Electoral Roll
One of the quickest and easiest ways to improve your credit score is to get on the electoral roll. This is a public record of all eligible voters in the UK.
When you are on the electoral roll, lenders can easily verify your identity and address. This makes you a less risky borrower, which can help to improve your credit score.
5. Use a Co-Signer
If you are having difficulty getting approved for a loan, then you may be able to use a co-signer. This is someone who agrees to be responsible for the loan if you cannot make the payments.
Using a co-signer can help you to get approved for a loan, and can also help to improve your credit score. However, it is important to remember that if you default on the loan, then the co-signer will be responsible.
Conclusion
It is possible to get a mortgage with bad credit, but it is not always easy. There are a few things that you can do to improve your chances, such as working on your credit score, finding a cosigner, and shopping around for the best deals. However, be prepared to pay a higher interest rate and to put down a larger down payment.
If you need advice on mortgages, we’ve got you covered. At Everest Mortgage Services, we understand that life comes with big decisions, especially when it comes to finances. From finding a mortgage for your first home to securing a loan to make a significant purchase or life insurance that protects your loved ones, you have a lot to think about. As leading experts, we are committed to delivering tailored advice that fits your personal circumstances. For more information, visit our website today!
