Nationwide has said that the housing market remains steadily strong, with mortgage approvals continuing to exceed their pre-pandemic levels. Some people may think that having a bad credit history can stop them from ever owning property, but in fact, approvals have been steadily climbing.
Tips for Getting a Mortgage Approved with Bad Credit
1 – Understand What “Bad Credit” Is
The term “bad credit” means different things to different lenders. At the most basic level, bad credit usually means that you have missed payments – more than one, at that. It can also mean that you have a lot of debt outstanding and that you have a history of late payments.
The reason why different lenders use different definitions is that they’re trying to judge the amount of risk associated with lending to you. Every lender has different requirements, so it’s important to know what your current situation is.
2 – Get a Credit Report from Multiple Agencies
Credit reports are the main way that lenders learn about your financial history. They look at how you’ve paid your creditors in the past and make decisions based on this information.
When dealing with bad credit, it’s best to see credit reports from several lenders and get a good idea of what’s going on. If you do this, you may see some differences in your credit profile. For example, it may be that one agency is reporting fewer missed payments than another.
3 – Avoid Repeated Credit Searches
If you have bad credit, then you may be tempted to apply for a lot of credit in order to improve your credit score. However, this can actually have the opposite effect.
If you apply for lots of credit, you will soon have a bad credit history. It’s important to have a good credit history, and that means you should apply for credit only when you really need it.
4 – Don’t Take a Bad Deal (or the First Deal you Get)
One of the most common mistakes people make is accepting the first deal that comes their way. Bad credit can be a difficult thing to deal with, and you may get frustrated by your application being declined. If you do get a bad deal, then there’s little point in you staying with it.
Bad credit doesn’t mean that you need to pay an excessive amount for a mortgage. If the interest rate is too high, then you need to find an alternative lender. There may be ways to reduce your payments, but you need to think carefully about what you’re doing.
5 – Improve Your Credit Score
There are many ways to improve your credit score, and it’s important to know what they are. For example, getting a credit card can be a good thing if you use it wisely.
Don’t go overboard, as you want to avoid racking up too much debt. However, having a credit card can show that you can handle credit responsibly, which is important for getting a mortgage.
Conclusion
Having bad credit will not prevent you from getting a mortgage, but it can make things more difficult. There are plenty of mortgage providers that will work with you, but you need to go about it correctly.
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.
If you are in need of a bad credit mortgage, come to A Move Brokers. We offer a wide range of mortgage products and can help you get the best deal to suit your individual needs. Book a free consultation today!