Can you get a mortgage with a bad credit score?

The latest industry research has revealed that over 70% of people are worried they won’t be able to get a mortgage due to their credit history. Even so, only (roughly) 20% have actually been turned down for a mortgage for this reason. So here is a short guide to mortgages and credit scores.

First things first, your credit score is a number that represents your credit history. It is important to note that there is no universal credit score, as different lenders use different methods of calculating your score. Banks and Building Societies will look at your credit history (among many other factors) to work out whether you’re likely to pay back your mortgage. So, if you’ve got credit card debt or you’re dipping into your overdraft, they may be concerned depending on how much you owe, but it doesn’t necessarily mean you’ll be rejected.

Your best option is to obtain a copy of your credit report (there are free tools you can use online to do this), speak to your adviser and be honest. They will be able to highlight any areas of concern and help you be better equipped for your application. As they say, knowledge is power.

Secondly, there are things you can do to prepare your credit situation for an application. If you do owe money on your credit cards or are behind on your bills, try and pay the debt back. If you can’t clear it, then aim to be paying it off each month on time at higher than the minimum amount. Similarly, try and avoid buying anything on finance in the lead up to an application, such as a car, unless it’s essential. Again, speak to your adviser about your options because every situation and application is different.

Finally, if your credit history contains something a little more adverse, for example a CCJ or bankruptcy, then many of the high-street lenders might turn you away. However, there are lenders who specialise in people with, what they call, ‘adverse credit’ and consider the wider context, such as how long ago the issues were.

Speak to your adviser and they will do some research for you into which lenders might accept you and what they may offer. Even if it is not possible to be approved for a mortgage right now, by speaking to an adviser you may get a better idea of what you need to do to.