What to do if you are looking for a mortgage but have a poor credit score

Applying for a mortgage can feel like a complicated mountain to climb, and that’s especially true if for some reason you have a low credit score. Fortunately, all is not lost. There are some lenders that will still lend even if you don’t have a great credit history. So what can you do to ensure the most success when your score is low?

The simple answer is to build your credit rating up. You can do this by firstly, finding out what your credit score is.

There are three main credit reporting agencies: Experian, Transunion and Equifax, and each of them can send you one free copy of your credit file per year. This will include your rating. This is good to know because it might not be as bad as you think and whatever your score, it’s a great starting point for improving it.

So how do you change it?

There is no immediate fix to your credit score. Unless you feel that there is something in the report that is not correct or shouldn’t be in there it’s going to take more than one day to change.

Your credit score report will look at factors like payback accounts; loans and credit cards etc along with any missed or late payments.

Show you’re on the ball

Providing your mortgage advisor with all relevant information about your finances will show that you are able to manage your money. This helps to create a picture of reliability which will work to convince lenders they can trust you. The more history you can provide, the clearer and easier it is for them to build a picture.

Confirm your identity

Make sure all your bills are registered to your current address. Make sure you are registered on the electoral roll too. You want to make yourself as traceable as possible so having everything up to date and current is key here.

Making it easy to confirm your identity will help to make sure lenders can clarify who they are working with building a picture of how trustworthy you are.

Don’t miss repayments

Keep track of your money and make sure to never miss a payment on a bill. Make sure you are looking at your accounts monthly to check that you haven’t gone overdrawn because you forgot to transfer some money over. This can seriously harm your credit score as it will portray you as unreliable.

Another thing you can do is save a larger deposit. The more you can put down the less you have to borrow and the less of a risk you look to lenders. This will also reduce the amount you are going to have to pay monthly, which is a win-win in our book!

So there we are. Although it’s undoubtedly more difficult to get a mortgage when you have a poor credit score, it's not impossible. There are many things you can do to make sure you are in the best position. For more information check out MoneySavingExpert.com


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