How to buy a home if your credit rating sucks

The recent economic downturn has trapped many people in difficult financial situations.  If you’re one of these people and you are looking for a way onto the property ladder, having a bad credit history can really feel like a kick in the teeth when it comes to applying for a mortgage.

The high street lenders remain interested in those that have a good record and credit score but of course there are all sorts of reasons that can lead to blemishes on a credit file. It might be the loss of employment or a breakdown in a relationship that has led to the initial problem for example.

It’s no secret that Lenders tightened up their rules and processes as a result of the credit crunch, meaning that people with poor credit ratings have less options.

However, all is not lost.

It doesn’t mean that it’s impossible for you to get a mortgage if you have a poor credit rating.  It’s all about how you deal with the situation.  Lenders may be more sympathetic if you have taken steps to resolve any issues on your credit file, and show that you have recovered successfully and are now in control of your finances.

The first step in this process begins with checking your credit file.  There are a few major credit file companies such as Experian, where you can get a copy of your credit file for a relatively low fee, with some starting to offer it for free.

When you obtain your credit file, have a look for any mistakes.  Wrong spelling of names, wrong addresses, and any other simple issues.  If there are any mistakes, you can apply to have them removed/corrected.

If there are any disputes where you think a company has noted your credit file in error, you should contact them to find out if they can resolve the mistake.  The company that places a note on your credit file of a missed payment/default/CCJ can ask for it to be removed if it was in error.

It may be that you are in a position now to settle any debts that appear on your credit file.  If this is the case, the company you owe money to can then mark the default as settled/satisfied.  This doesn’t mean it will be removed from your credit file, but Lenders can choose to ignore defaults that have since been settled/satisfied.

If there are any major problems with your credit rating such as missed payments, defaults or county court judgements, remember that time is a great healer and most  credit issues drop off your credit files, although it could be as much as 6 years from when the issue was noted on your credit file.

Here are some other ways you can improve your credit rating:

  • Rebuild credit by using and regularly clearing a credit card.
  • Always manage money within overdrafts and set up standing  orders to ensure the minimum sum on any credit account is always met, never leave it to chance.
  • Make sure you appear on the electoral roll.
  • If you have credit cards with large unused limits then reduce the limit or close them as Lenders can get nervous when they see large available credit amounts

Following these steps may just make life easier for you when it comes to applying for a mortgage and increase the chances of being approved or getting a better rate.

There are Lenders that will lend to people with poor credit ratings, but they will often have a higher rate of interest as a result of the ‘risk’ involved with lending to you.

For help understanding self employed mortgages please also visit YouTube, Facebook or make an enquiry via the website where the team and I will be happy to help you prepare for your mortgage application by giving you a clear picture of where you are now vs where you want to be.  

You should contact a mortgage broker for personalised advice for your specific circumstances.  Please also ask us for a personalised illustration.

Active Brokers Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register ( under reference 488342.  

The overall cost for comparison is 5.4% APR, correct as of 05/03/2017.

We charge a fee of up to 2% of the amount borrowed which is payable on application of the mortgage.  The fee charged is dependent on your circumstances.  

Your home maybe repossessed if you do not keep up repayments on your mortgage.


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