LoginSubscribe to Alerts

Credit Scores And Mortgages - All You Need To Know

Posted 7 December 2022 by Helen Christie

Getting a mortgage in the current market can feel like an uphill battle, one that is even more difficult if you don’t have the best credit history…

Experts at Uswitch.com have evaluated the current options for mortgage applicants with bad credit scores, as well as, top tips and tricks to improving your credit score when applying for a mortgage...

Can you get a mortgage with poor or limited credit history? 

Bad credit is a spectrum when it comes to mortgages, and there is some variation in the requirements among the major high-street lenders. For example, some lenders are prepared to consider less serious credit issues, such as default and CCJs when they are two to three years old and/or have been satisfied. 

Mortgages for bad credit

  • Some mortgage lenders specialise in providing loans for those with bad credit. They are also known as subprime lenders but they are not necessarily as accessible as traditional banks.
  • A mortgage broker may know more about which lenders are likely to accept people with bad credit, so it’s often worth speaking to an adviser before applying for a mortgage.
  • Taking out a mortgage with poor credit has disadvantages because you'll normally pay a higher interest rate and/or might be offered a smaller loan amount. Before making a choice, it's a good idea to compare the deals being offered to you now with those that might become available if you wait until your credit score has improved.

Guarantor mortgages 

  • Guarantor mortgages are another alternative for those who are fortunate enough to have a close friend or family who is willing to guarantee the mortgage for you.
  • The person serving as your guarantor must be aware of all the risks and obligations they are accepting if you are unable to make repayments. Their home and yours may be repossessed if you are unable to make your payments.
  • If you've been turned down for a mortgage because of poor credit, you didn't meet the criteria for affordability due to a low salary, or you can't afford to save the required amount for a deposit, a guarantor mortgage might provide you a way of getting on the property ladder. 

Tips to improving your credit score before your apply 

If you’re unable to find a suitable bad credit mortgage loan or guarantor mortgage, you should aim to improve your credit score... 

  • Verify that you are listed as a voter at your current address.
  • If you have any outstanding debts that you can afford to pay off, do so; otherwise, try to lower your overall borrowing so that it doesn't exceed 50% of your total borrowing capacity. For instance, if your credit card has a £5,000 limit and a £1000 overdraft, you would want your balances to be under £2,500 and £500, respectively.
  • Any accounts that you are no longer using, including credit cards, store cards, and others, should be closed. This includes any accounts you have with people you are no longer associated with financially, such as those you may have shared a bank account with, like those with an ex-partner.
  • Authenticate the accuracy of all the data that has been recorded about you. Incorrect addresses and other information can be problematic, but there may also be errors in the information that the agencies have recorded as a negative mark. You can occasionally ask to have a note added to your file to explain a late payment if you can demonstrate that it was not your fault, for instance, because of postal strikes or a creditor-side accounting issue.
  • You can also apply for specific credit cards made to raise your credit score; these are especially useful if your score is low as a result of little credit usage in the past. However, to demonstrate that you can manage debt sensibly, you must borrow wisely and make all the repayments on time.

Read more about getting a mortgage with bad credit

Find out more about checking your credit score

Should you overpay on your mortgage?
7 March 2023
Brian Murphy from the Mortgage Advice Bureau is sharing advice on whether overpaying mortgages is the right option…Read more
Kyrie Russell of New Homes Mortgage Broker
27 February 2023
Before their appearance at The Midlands New Homes Show, Kyrie Russell introduces specialists New Homes Mortgage Broker...Read more
Jo and Nikki, Plus Mortgages
20 February 2023
We hear how Plus Mortgages focus on the positives when it comes to advising clients, and how a good broker should be for life...Read more
Sign up for email alertsGet the latest properties and updates sent directly to your inbox daily, weekly or immediately you are in control.
Subscribe to Alerts
Search news and advice

Click here to see your activities