If your credit history isn’t favourable and you are looking for guidance on how to improve your chances of getting a mortgage, this blog is for you. We’ll take you through how lenders assess credit history, what mortgage options are available for those with adverse credit history and steps you can take to improve your credit score, as well as ways you can increase your chances of being approved.
How lenders assess credit history
When it comes to assessing credit history, lenders look at a number of factors. The following information applies to those in England and may vary if you live in Northern Ireland, Scotland or Wales, so you will need to check accordingly.
Mortgage lenders carry out credit checks to get a feel for how credit worthy you are. The higher your score, the more likely they will be to approve your mortgage application. The way each lender carries out credit scoring may differ, though here are some typical things they will look for:
- Personal details. This includes any names that are associated with your credit, past and current addresses and your date of birth.
- Employment history. Your past and current employers listed on past credit applications.
- Loan information. On current loans and revolving credit accounts and credit limits, any late payment dates and your current status.
- Collection accounts. That are open and resolved.
- Bankruptcies. The only public record noted on your credit report.
- Credit inquiries. This includes those from prospective credit card issuers and prospective lenders.
It’s a good idea to review your credit report as part of the mortgage process so you can understand your credit history. We recommend Checkmyfile which you can read more about here.
What mortgage options are available for poor credit applicants
If you have adverse credit, it is still possible to get a mortgage, though your options could well be more limited.
Some high street lenders may not be prepared to offer you a mortgage though building societies tend to be more flexible. And there are specialist lenders who are also more flexible. Specialist lenders include those who work with people who have been faced with illness, divorce or other difficult events.
Although they are more flexible, specialist lenders typically charge higher interest rates and ask for larger deposits.
