Having a low credit score can be caused be a variety of factors. It could be debt/credit agreements you have had in the past that have gone bad e.g. you have missed a series of payments these could have ended up in default (normally 8 missed payments and the agreement has broken down between you a the lender) it could be you have utilised a lot of debt and have several amounts owing to different lenders across a series of credit cards, store cards or loans. You may have several credit cards that run very close each month to their credit limits. Whichever the situation it is very difficult to pin point the exact reason you have a low credit score.
You can try an improve your low credit score by reducing debt, possibly closing accounts you do not use and ensuring you do not miss any payment over time this will help improve your score, however there is no exact way of gauging when this will improve.
Can I get a mortgage with a low credit score?
The simple answer is yes, there are two ways in which lenders check potential borrower’s credit reports this is credit scoring and credit searching.
Lenders that use credit scoring often generate their own score using a variety of internal factor some of which we may never know exactly however they generally compromise of your credit profile ( the higher your score the better this will be it shows you pay your debts on time and are a responsible borrower), the deposit what you do for work, how much debt you currently have the type of application can also influence this factor.
If you have a low credit score this does not mean you are not worthy to lend to, there may be a justifiable reason this has happened, you may have suffered a job loss, redundancy, illness something else outside of your control. This could happen to anyone. Luckily there are lenders that understand this happens and can happen to anyone at some stage in life.
Lenders that use credit searching ignore your low credit score and regardless of whether it’s a score of zero or 999 will still look to lend as long as you meet there criteria. If you low score is due to missed payments, as long as this fits the lender criteria e.g. none in the last 3 months or none in the last 12 months depending which lender you approach there will completely ignore the score.
Obtain a credit report
It is essential that any specialist mortgage advisors we work with have access to your credit report. They need to see what any lender is going to see before approaching a lender to perform a credit search. Sometimes there are errors on a credit profile that will result in a decline from a lender. We would recommend using a website such as Check My File as they cross reference the 4 major credit agencies. This way the advisor can see why the score is low and work out which lenders will consider you.
What are my next steps?
Simple, once you have obtained a credit report make an enquiry.
We work with specialist mortgage advisors who know the ins and outs of obtaining a mortgage with a low credit score and know which lenders to approach and more importantly which lenders not to approach. They will guide you through the application process and ensure that you have the best chance possible of obtaining the best mortgage possible for your circumstances.