Can you get a mortgage with bad credit, what credit score do you need to buy a house and how can I improve my rating?

Here we run down the ways you can work on your credit score and what options are available to you.

What is your credit score?

One thing which confuses many people about credit rating is the score you are given if you check your rating.

All three main credit agencies, Experian, Equifax and Call Credit, have different scoring systems AND there is no universal rating or score.

The three companies have different scoring systems AND there is no universal rating or score.

Experian will rate you on a scale of 0-999, Equifax from 0-700 and Call Credit from 0-710.

For all three, the higher your score, the better your rating.

The score is based on information in your credit report.

There is no set calculation but it is based around your payment history, length of history, types of credit used and other criteria.

How do I find out my credit score?

This has to be the first thing you do when you begin looking for a mortgage and the earlier the better.

Try using the 3 main credit reference agencies Experian, Equifax, and Call credit to see what has been registered against your name.

It's vital to to get a copy of each to see what and if there are any issues in your history – outlining specifically what they are.

Once you have them, please note, scores and files may differ according to which reference agency you use.

Before approaching a lender, once you have your files, spot the issue and try to fix it depending on what it is.

Finding the adverse issue which is affecting your score could be the very key to making the changes you need to improve.

For example root out the specific card and spend and repay in full on a monthly basis – do this for a while and you should see positive results.

Also keep your balance within its limits and low to earn extra points.

Tops tips: How to improve your credit score

  • Pay your bills 
    Late payments, even if only slightly e.g. a few days, can have major negative impacts on your file.
  • Stay up to date with payments
    Good credit is mainly about consistency, the longer you leave bills unpaid the more points you get knocked off your score – staying up to date with yoru direct debits and bills is key!
  • Contact your creditors 
    If you communicate with your creditors when you are having trouble making ends meet, you might be able to set up payment plans.
  • Paying off a collection account will not remove it from your credit report.
    It will stay on your credit report for up to seven years.
  • Use a credit-builder credit cards
    These cards tend to have high interest rates compared to normal cards but if you can show you're a responsible spender with them, it can improve your chances in the eyes of lenders.

What credit score do you need to buy a house?

The good news is in the UK, there is no set minimum credit score in order to get a mortgage or buy a home.

However, your credit score will have a huge impact on the type of mortgage you are able to get.

 

Can you get a mortgage with a bad credit score?

Bad credit means rates and fees will be higher because the number of lenders is limited.

Automatically having a poorer credit history means you are considered by lenders as ''higher risk''.

However, it's not all doom and gloom because you'll be pleasantly surprised at just how competitive the rates are.

Even with an adverse file you can get a ''fair'' mortgage which are not far off from mainstream deals.
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