Adverse Credit – The Silent Killer

The title to this blog may be a little dramatic, but ultimately when it comes to your mortgage application it cannot be emphasised enough the importance of ensuring that your credit does not hinder your application.

The financial world has focused more and more on leveraging, and making available credit for people over the years, even in forms where you may not quite realise it.  Obviously this flexibility can be fantastic and ensure that life runs that little bit smoother than without.  However, turn the other way and this situation can quickly turn in to a financial nightmare that is hard to wake up from.

With the explosion of available credit has come credit agencies to manage this.  Often maligned, they are no doubt the go to point of reference when it comes to checking your creditworthiness for a mortgage application. One step out of line can often see best packaged mortgage fall down and, with it, the hopes of potentially your dream home for some time.

Consider how many items of credit you might have, and you may jump to the obvious.  Loans, credit cards, hire purchase cars, etc.  But what about your mobile phone, the energy bills, that store card that paid for your sofa?  These are all items that we may not take seriously, but miss a payment, or default, and it will prove every bit as costly as if it were a credit card, or a loan.

Missed payments, defaults, CCJ’s, and bankruptcy, will all ensure that a mortgage could be incredibly hard to come by.  Lenders are forever concerned about the ability of the mortgage to be repaid and, without knowing you personally, there is simply no other way to check this than on a digital copy of your credit.  If this is less than perfect then it opens up doubt in their mind, and with doubt comes the potential for rejection.  So why take that chance?  Follow the below checklist before applying for a mortgage:

  • Run a credit report for yourself if you are unsure how your record may look. It is a useful tool to show all accounts held, both past and present, and will give a great guide to the current state of your financial affairs.
  • Ensure that all payments are kept up to date. If you miss a payment accidentally, make sure it is paid as soon as possible and discuss this with the provider to ensure that there is no detrimental mark on your record.
  • Too little credit can often be seen as bad, but so can too much. Ensure that the credit you take on is right for you, and affordable.  Do not overstretch yourself, and try to limit “maxing” out your limits.  Demonstrating that you can manage your facilities is a great indication to a mortgage lender that you are a responsible borrower.

By following the above advice, you can ensure that your record is as good as it can be.  By passing in this area, you will ensure that you have the widest choice available when it comes to selecting a company to take a mortgage from.

However, if you have had issues in the past, and you still wish to find out your options for a mortgage then please do not think that it is a dead end.  There are still a wide range of “adverse” mortgage lenders who will consider providing mortgages to those who are in a less fortunate position with their credit score.  Often this will involve bypassing the report, and looking at the individual in more detail i.e. with bank statements, to ensure that the ability to repay a mortgage can be justified.

Call, or e-mail, today to find out more and to get great advice on what options are available to you.

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