If you want to apply for a mortgage but are worried that your credit score will hold you back, you need to know about low credit score mortgages. There may still be an opportunity to buy property with a mortgage when you have a poor credit history.
What is a credit score?
A credit score is a rating of how you have handled your finances and debt repayments. Your credit report is filled with records of how you have paid back creditors (or not) and any court judgments made against you. Your credit history informs your credit score, which is checked by creditors when you make a credit application.
How does your credit score affect mortgage applications?
Your credit score is an important consideration among mortgage lenders as part of a mortgage application. It will influence the mortgage provider's decision to approve or reject your mortgage application. Your credit score tells the lender how you have handled finances and debt repayment previously, which can inform them whether you’re likely to keep up with mortgage repayments. In a nutshell, they’re checking how risky it is to give you a mortgage.
How to check your credit score
You can check your credit score by visiting credit reference agency websites. Some of the most popular UK credit reference agencies are Equifax, Experian and TransUnion. You can often check your credit score for free but be aware of any free trials you may sign up for, might transfer into a paid subscription.
When you check your credit report, make sure to look out for mistakes. Credit report mistakes are fairly common and could be wrongfully reducing your credit score.
Can I still get a mortgage with a low credit score?
Yes, you can! Although a credit score is considered within mortgage applications, it’s still possible to get approved for a mortgage with a low credit score. The credit score isn’t the only thing that informs the lender’s decision. There are several factors to be considered, including affordability.
What is the lowest credit score to buy a house?
Standard mortgage lenders may approve your mortgage application with a credit score in the low 600s. There are even specialist mortgages for people with low credit scores which are approved for people with a credit score in the 500s. These loans are typically known as bad credit mortgages.
What is a bad credit mortgage?
A bad credit mortgage is a mortgage for people who has an unsatisfactory credit history. They’re usually offered by specialist online lenders rather than high-street banks, so not as many people know about them.
A bad credit mortgage could be approved when you have a poor credit score and even when you have more serious credit file records, such as defaults, an Individual voluntary arrangement or a past County Court Judgment. They are mostly used to purchase residential property, but it might be possible to get a bad credit BTL mortgage as well.
The advantage of using a bad credit mortgage is that it provides you with a loan to buy property when other lenders won’t offer you a mortgage. However, the downside is that these mortgages may be limited in size and could be charged at a higher interest rate.
Can I remortgage with a low credit score?
It’s possible to remortgage to a new deal when you have a low credit score, which may mean remortgaging to a low credit score mortgage. If your credit score has improved since you took out your last mortgage, you might even get a cheaper deal.
Where can you get a bad credit mortgage?
Bad credit mortgages are offered by specialist mortgage lenders specifically advertising to people with an unsatisfactory or adverse credit history. To find the most suitable low credit score mortgage for your needs, speak with Click Mortgages by clicking on the Enquire button or by calling us now on 0800 0854401.
