Can I get a mortgage with bad credit?
Yes. It is possible to get a mortgage if you have poor credit, except if you are bankrupt. Most lenders will only give mortgages to people that have a discharged bankruptcy of six years or more. If you have any County Court Judgements you can still get a mortgage as long as they have been paid.
Will I pay more interest?
Yes. Your mortgage will have a higher interest rate than someone with a good credit score. As you build up good credit, you should be able to exchange your mortgage for one with a lower rate, but this will probably take some years.
Do I need a higher deposit?
Yes. You will be asked to put down more money. It is usually about 15% more than a lender will normally ask. For example, if someone wants to buy a property for £100,000 they might be asked for a £5,000 or £10,000 deposit depending on the lender, that’s 5 – 10%. If you have bad credit then you may have to put down £10,000 or even £15,000 which is 10 – 15%.
How do lenders know I have a bad credit history?
If you apply for a mortgage, a loan or any other form of credit the lender will do a credit check. This means that they will get a copy of your credit file. They can do this because in most applications you’ll be asked to give your permission for a search to be carried out. If you don’t give permission you when you are asked, you won’t be offered credit.
Can I get a mortgage from a government scheme?
Unfortunately, no. If you are looking at Shared Ownership or the Help to Buy Scheme you do need to have a good credit rating to obtain a normal mortgage.
How can I get my credit rating to improve?
Over time, it is possible to improve your credit rating. There are a few things you can do to make it better. For example, if you have a County Court Judgement against you, try to build up your credit immediately. This will mean that after six years, when the judgement disappears from your file, you will have a much better credit score.