How to get a mortgage if you’re struggling

Getting rejected for a mortgage can be very distressing. Every lender has their own hoops you need to jump through, and sometimes you might fall short of their key requirements.

It’s important to remember that being rejected by one lender doesn’t mean that you will be rejected by all lenders. If you’ve recently been rejected for a mortgage, consider if any of the following situations apply to you.

I have a poor credit score
My income is low
I only have a small deposit
I moved to the UK less than three years ago
I’m self-employed

Read on to discover how you can work around these common problems and finally get on the property ladder.

My credit score is holding me back

Your credit score is usually the first thing that mortgage providers will consider. Your credit score can differ depending on the credit scoring agency.

There are three main credit scoring agencies in the UK. They are Equifax, Experian and Call Credit. Your chosen lender might look at one, two or all three of them to asses the strength of your application.

A credit score helps lenders to understand your past relationship with money and borrowing. They can see things like your total amount of debt, missed credit card payments, utility bill arrears and even adverse credit history like CCJs. They can also check that your address history matches the information you provide.

If you have a poor credit score, this can impact your chances of being accepted for a mortgage. Before making an application to another lender, check your credit score with all available agencies.

Make sure the following details are correct and up-to-date.

Your name and address
Electoral roll details
Your current accounts
Closed accounts
Satisfied CCJs are removed if 6 years have passed.

If there are mistakes on your credit report, this can impact your ability to secure credit.

The following steps will help to improve your credit score.

Keep your details up-to-date.
Make sure you never use more than 50% of your total credit limit.
Avoid too many hard credit searches in a short space of time. This usually means waiting at least 90 days after every failed credit application.

When your credit score is improved, you can try applying for a mortgage again.

My income is low

Mortgage providers make their lending decisions based on affordability. If they have concerns that you won’t be able to afford the repayments on your existing wage, then they may reject your application.

Lenders also consider things like future affordability. If you lost your job and it took a few months to find a new one, would you be financially stable enough to keep up with payments? Or if interest rates increase, will the higher payments make your loan unaffordable?

Padding your income or being overly optimistic with your expenses is another warning sign to lenders.

A help-to-buy scheme might be more suited to your situation. You should also look at shared ownership as a way onto the property ladder.

I only have a small deposit

A mortgage lending decision is based entirely on risk. This is why house hunters with a big deposit are seen as more attractive. The large deposit helps to reduce the risk for the lender.

If you think you have been rejected because your deposit is too small, there are a few steps you can take.

Look for a lower valued property. This will mean that your loan to value is higher.
Save more money to increase your deposit value.
Look for a help-to-buy scheme that could boost the value of your deposit.
Use a shared ownership scheme to get on the property ladder with a smaller deposit.

I moved to the UK less than three years ago

One of the things that lenders look for is a history of ties to the UK. If you moved to the UK less than three years ago, you may struggle to secure a mortgage.

When filling in a mortgage application, you will often be asked for your address history for the past three years. If any of these addresses are outside the UK, you may struggle to secure a mortgage.

In many cases, you may simply need to wait until you have a history and evidence of living in the UK for more than three years before making your application.

Some lenders will be more inclined to accept applications from those with less history in the UK. Only by working with a specialist broker can you get access to these lenders.

I’m self-employed

The self-employed often struggle to prove their earnings and convince mortgage providers that they are a safe bet. Unlike a monthly salaried job, freelance work is considered to be high risk. Your earnings might fluctuate, so you could struggle to make the payments.

If you are self-employed, you will typically need to provide two-year’s of accounts as evidence of your earnings. Lenders might take an average of your last two year’s earnings, or they could look at the most recent tax year as evidence of future earning potential.

Being self-employed doesn’t have to mean the end of your mortgage journey. While some high street lenders might be reluctant to give you a mortgage, an increasing number of specialist lenders see the benefits of self-employed workers.

As the self-employed sector is growing, the mortgage industry is taking a little longer to catch up. By working with a specialist mortgage broker, you’ll be able to navigate the mortgage process with ease.

If you’re ready to make your homeowner dreams a reality, get in touch with Niche Mortgage Info to find out how we can help you get a mortgage if you’re struggling.

CCJs should not block customers from affordable finance

A CCJ, or County Court Judgement is an order by the court to repay your debts. They occur when creditors take a debtor to court if they are behind on their repayments. Before a CCJ is applied, the debtor has the opportunity to repay their debt within a certain timeframe to avoid a CCJ. If they are unable to do so, they will be forced to create a repayment schedule that is based on affordability. A record of the CCJ will remain on the individual's credit report for six years, but in reality, they are left suffering for much longer than this.

Easy target for irresponsible lenders

Since many responsible lenders will reject credit applications from those with CCJs, this opens the door to unscrupulous lenders to target the vulnerable. High-interest loans with obscure terms and debilitating late payment fees can make a bad situation worse for someone with a CCJ on their record. Through no fault of their own, they can be tricked into becoming an irresponsible borrower simply because they do not have access to affordable credit.

Suffering continues long after it is cleared

Individuals with a CCJ on their file will have to wait six years to see it removed. And even after it has disappeared from their credit report, they still have to contend with six years of poor credit history. Credit reporting relies on one thing: borrowing. If you do not have a history of borrowing money and making regular repayments, then your credit history will be poor. In fact, someone with no debt at all will often have a lower credit score than someone with lots of debt, even if the former is acting more responsibly than the latter.

Punished twice

Individuals with a CCJ on their credit report are not just blocked from affordable lending in the form of loans and credit cards. They can also find it a lot more difficult to get a mortgage. This can trap individuals in the rental market and make it more difficult to get on the property ladder in future. With the cost of rent rising, people with CCJs can find that they are punished twice. If they are able to secure a mortgage, they will need to put up a larger deposit or accept higher rates of interest.

Perceptions are changing

Mortgage providers are changing their ways and there has been an increase in the number of adverse credit history mortgages available. However, most high street lenders will automatically reject applications from those with CCJs. This leads to the unrealistic perception that CCJs exclude individuals from getting a mortgage, particularly when individuals aren’t aware of the existence of specialist mortgage providers. Perceptions are changing, but there is still a long way to go to ensure that people aren’t locked out of affordable finance. For example, lenders should look not only at the presence of the CCJ but the CCJ amount and the number of CCJs on record.

Imagine an individual loses their job and has short-term financial problems that lead to a number of CCJs. After securing another job, they repay the CCJ ahead of time and are financially stable again. It seems unfair that this person should be locked out of affordable finance when they have a steady income and an otherwise gleaming credit history. It isn’t only those with CCJs, IVAs and defaults who suffer. Even the self-employed can struggle to obtain credit as a result of their status.

Mortgage providers have a responsibility to ensure they are offering a range of products to all customers and not excluding people based on adverse credit history. And this should include taking into consideration individual circumstances, current affordability and evidence of responsible borrowing.

Mortgages for Discharged Bankrupts

If you’ve been declared bankrupt in the past, this doesn’t have to mean the end of your dreams of owning a home. Many people assume that bankruptcy means that you’ll never be approved for a mortgage, and while it might be more difficult, it isn’t impossible. We regularly hear from customers who have been declined from their first mortgage application and are quick to assume that the search ends there. However, we’re pleased to say that it isn’t an uncommon situation to be in and there are ways to find a mortgage after bankruptcy.

This type of mortgage might be trickier to set up and you might have to jump through more hoops than the average mortgage applicant. However, it can be done. Once you have satisfied a lender that you aren’t high risk, you will be treated like any other lender. And once you have a mortgage, this can help you to secure other types of credit and start building up your credit report even further. So, if you’re dreaming of owning your own home or want to invest in a buy-to-let property following bankruptcy, don’t give up yet.

What is bankruptcy?

If you are struggling to pay back your debts you can apply for bankruptcy. If you owe over £5,000, your creditors can also apply to make you bankrupt, even if you don’t want them to. Bankruptcy is a legal status that allows you to make a fresh start after 6 years. However, it isn’t something that should be taken lightly. If you declare yourself bankrupt, you may have to continue paying your debts for up to 3 years. You can also have your property seized in order to pay back your debts. If you have been made bankrupt, some occupations won’t allow you to work again, and in many cases, it can be more difficult to secure credit.

As with any type of poor credit, bankruptcy can make you feel like you are on a blacklist of borrowers. The good news is that more and more lenders are committing to help those with poor credit get back on their feet, even those who have been declared bankrupt. If you’re trying to get a mortgage following bankruptcy, this article should help to clear up some of the common misconceptions surrounding mortgages for discharged bankrupts, including:

Mortgages for discharged bankrupts from 1-6 years ago
Securing a mortgage with a history of repossession
Securing a mortgage with bankruptcy and a small deposit of 10-15%
Securing a mortgage with a 5% deposit
Mortgages for discharged bankrupts with a large deposit
But to let mortgage for discharged bankrupts
Remortgaging following a discharged bankruptcy
Bankruptcy annulment and mortgages

How long do I need to wait after bankruptcy before I can get a mortgage in the UK?

Many people assume that they won’t be eligible for a mortgage after being declared bankrupt, but this is rarely true. While you will have to wait until you are discharged before applying, this can be as little as 12 months and even less depending on the court’s ruling. Once you have been discharged, you will then have to focus on rebuilding your credit and ensuring that you look trustworthy in the eyes of lenders again. During this time, you might assume that not taking on any more credit is a wise mood, but this might actually be counterproductive. In reality, you need to show lenders that you are capable of making payments regularly and on time.

In terms of a mortgage application, the amount of time you wait between your discharged bankruptcy and applying will have a huge impact on your eligibility and the amount of deposit required to move forward.

The longer you wait, the lower the deposit you will need and the fewer restrictions that will apply to your application. If you have a good financial contact for 4-5 years following bankruptcy, you might find that you are able to borrow 90-95% of the value of a property just like any other borrower. Even those who have only been discharged for 12 months may find they are eligible for a mortgage with a 25% deposit.

The table below shows typical eligibility for discharged bankrupts seeking a mortgage. As you can see, the longer you leave it before applying, the more likely you are to be able to secure a mortgage with a smaller deposit.

Can I get a mortgage if…?	Declared bankrupt	Bankruptcy discharged	Eligibility	Deposit required
I’m just bankrupt	0 years ago	0	No	N/A
Bankrupt 1 year ago	1 year	0	Low	At least 40%
Bankrupt 2 years ago	2 years ago	1	Low	At least 25%
Bankrupt 3 years ago	3 years ago	2	Low	At least 25%
Bankrupt 4 years ago	4 years ago	3	Med	At least 15%
Bankrupt 5 years ago	5 years ago	4	High	At least 10%
Bankrupt 6 years ago	6 years ago	5	High	At least 5%
Bankrupt more than 6 years ago	6+ years ago	6+	High	At least 5%

Please note that this information can change regularly so you should always consult with a mortgage advisor before making any financial decisions related to mortgages. During times of political uncertainty, lenders might be less willing to lend and those who are considered high risk are often the first to be rejected.

The table above doesn’t guarantee that you will be given a mortgage if you were made bankrupt 6 years ago and have a 5% deposit. Many other factors go into the decision-making process and the time that has elapsed since your bankruptcy is only one of them. If you have a poor credit file, for example, and have done little to rebuild your credit, you might find it more difficult to get a mortgage. However, if you have been responsibly working towards building your credit, you may find you can get a mortgage much sooner.

Here is an infographic we put together to break all stages down in a visual way.

How do I give myself the best chance of having my mortgage approved after bankruptcy?

Bankruptcy doesn’t have to mean the end of the road for your chances of owning your own home or even purchasing a buy-to-let property. If you’re serious about getting your finances back on track, there are steps you can take to start building your credit again. Once your bankruptcy is discharged, you will find it more difficult to get credit, so you should essentially start from the beginning. Follow these steps to building your credit following bankruptcy…

1. Check ALL credit reports and make corrections

There are three main credit reference agencies in the UK and they all have a different system for generating your credit score. Before you can decide if you’re ready to take out a mortgage, it’s important to get a complete picture of how each of these credit checking agencies views your profile.

It’s impossible to know which credit checking agency your mortgage provider is using, and some will use an amalgamation of all three in order to generate a more complete picture. If you don’t have access to the same information, it’s difficult for you to know when you are ready to make your application.

It’s also very common for mistakes to appear on your file following bankruptcy. You might also see some closed accounts still showing late balances, or defaults still cropping up on your file. If you see a mistake on your credit report, you can query this with the company and request that it be updated. It’s not uncommon for individuals to be declined credit because of mistakes on their credit report, but they will assume that it is because of their bankruptcy.

2. Check if you are eligible for a mortgage

Once your credit report is up-to-date, you can then inquire with a mortgage expert to find out if they believe you would be eligible to apply. They are used to working with people from all different financial backgrounds, so don’t assume that they won’t work with you because of your bankruptcy.

3. Rebuild your score until you are eligible

If your advisor recommends that you wait a while before applying for your mortgage, use this time to rebuild your credit score further. A simple way to do this is by making sure you meet your monthly payments on a credit card or overdraft. If you are struggling to get credit because of your history with bankruptcy, you can apply for a credit card specifically for people with poor credit. Use this for small transactions throughout the month and pay it off in full at the end of the month.

What if I have credit issues before or after bankruptcy?

Any credit issues from before your bankruptcy should be wiped out and not pose any further problems. So, if you had late payments, mortgage arrears or CCJs, this should be removed from your credit report once you have been discharged. This usually takes place one year after you have declared bankruptcy.

However, if your credit issues continue after your bankruptcy, this is likely to be seen an unfavourable to lenders. Mortgage providers will already see you as a high-risk customer, and if you have failed to bring your financial situation into line by continuing to make late payments then this might lead to your application being declined.

This is another reason that it is important to keep an eye on your own credit report. Mistakes left on your report could appear to lenders as new credit issues when in reality they should have been expunged from your record following the bankruptcy.

Time heals most things on a credit report, so if you faced issues immediately after your discharge but have improved your credit over a period of 6+ years, these are unlikely to have an impact on your record.

Where can I get a mortgage after bankruptcy?

There are currently around 20 mortgage providers who will accept applications from discharged bankrupts. They all have their own rules and regulations for who can apply and how long they need to wait after being discharged before applying. As outlined above, there are no guarantees when it comes to applying for a mortgage following bankruptcy.

Mortgage providers will consider many different factors when making a lending decision. The best way to find the right mortgage provider for you is to speak to an experienced mortgage advisor with knowledge of mortgage for discharged bankrupts.

Can I get a buy-to-let mortgage after bankruptcy?

Buy-to-let mortgages are some of the hardest to come by, but it is possible to secure a buy-to-let mortgage following bankruptcy. You will need to meet much stricter criteria, usually the following:

Be discharged for at least 3 years.
Have a clean credit score since your discharge
Secure at least a 15% deposit, sometimes even more
Own at least one other property
Have some personal income. There is no minimum income threshold, but you will need to have some income either from employment, self-employment or retirement

Can I use the equity in my home to remove bankruptcy debt?

This is a seldom used route but highly effective in removing bankruptcy from your file. If you are able to pay off the bankruptcy debt within a timeframe set out by the courts, you could secure something known as an annulment. This effectively wipes your credit score clean without resorting to bankruptcy and the discharge period.

Your eligibility for an annulment will depend on how you accrued your debts. For example, if you were forced into bankruptcy by HMRC for failing to pay a tax bill, you could use a secured loan against your home to clear any debts and halt the bankruptcy. This would leave your credit report unscathed and allow you to remortgage your home further down the line.

If you are forced into bankruptcy because of multiple debts, securing a loan to clear off your debts is going to be difficult. However, with a specialist second charge mortgage, you could avoid the bankruptcy process.

Conclusions

As outlined above, there are many options for those dealing with a bankruptcy who want to get on the property ladder. You could use a secured loan against your home to halt the bankruptcy proceedings. Or you can bide your time following bankruptcy and spend the time building your credit report.

Bankruptcy doesn’t have to mean that you can never get a mortgage again. Instead, it simply means that you will need to be wise to the companies that work with discharged bankrupts. A declined application doesn’t have to mean that you cannot get a mortgage, you might simply need to work on building your credit and allow more time to pass.

If you’re not sure how to proceed with your mortgage application, speak to a specialist mortgage advisor. They will be able to look at your situation and decide if you are ready to make an application or tell you what steps you need to make to get your credit report in line. Approaching the right mortgage provider to secure your agreement in principle can give you the confidence to start your search for the right property.

It might be more difficult to secure a mortgage for discharged bankrupts, but it isn’t impossible, so don’t give up!

Can I Get a Mortgage With a CCJ?

A lot of people assume that a CCJ is the end of the road for their finances. CCJs are so feared because many people assume it will land them on some sort of mortgage blacklist and will prevent them from ever getting on the property ladder. The good news is that none of this is true, and even those with a CCJ on their record can often find a way to secure a mortgage.

Finding a mortgage is a headache for anyone, but when you have an adverse credit history, the process can get even more complicated. However, it isn’t impossible to get a mortgage with bad credit, even if you have a CCJ on your record. There are companies that specialise in adverse credit mortgages. A mortgage advisor will be able to help you to find a lender that matches your profile and is, therefore, more likely to accept your application.

More and more lenders are opening up to the idea of approving mortgages for individuals with CCJs. Since a CCJ is just one factor on your record, many lenders are now choosing to look at the bigger picture rather than focus on one component. Every lender will have their own limits as to what they consider to be acceptable, so if you’re ready to put your CCJ behind you and start building your credit profile again, there’s no reason you won’t be able to.

What is a CCJ?

A County Court Judgement, or CCJ, is a type of court order in England, Wales, and Northern Ireland. They are registered against individuals if they fail to repay money that they owe. A CCJ is often the last resort for lenders and it won’t come out of the blue. If possible, you should always work with lenders to find a solution to the problem before a CCJ is registered.

If you pay off the full amount within 30 days of receiving notice of your judgement, you will avoid it being entered on your credit score. Once on your credit report, it will stay there for six years, even if you pay it off in this time. Lenders look at your credit report when making lending decisions and a CCJ on your report can make them less likely to lend you money.

So, how do I get a mortgage with a CCJ?

When making a lending decision, mortgage providers aren’t just looking to punish people with bad credit. They are tasked with finding out about your financial history and using this information to make a decision about the likelihood that you will be able to pay back your mortgage. Having a CCJ on your record isn’t ideal, but it isn’t the end of the story. In general, a mortgage provider will consider the following factors…

Date of the CCJ

The date of the CCJ is perhaps the most important thing that a mortgage provider will consider. If your CCJ was over three years ago, it will be far easier to get a mortgage than if you have had a CCJ registered in the past 12 months.

The date that the CCJ is settled it also of relevance to lenders. Some do not require the CCJ balance to be settled while others will require it to be settled in full for at least 12 months before making a mortgage application.

The amount on the CCJ

The size of the CCJ is another important factor that mortgage providers will consider when looking at your application. Some lenders will have their own limits as to what they consider to be the maximum allowable size for a CCJ. They will weigh the size of the CCJ against things like your deposit and how recently the CCJ was registered.

For example, if the CCJ is over three years old, then most lenders won’t take the size of the debt into consideration. If the CCJ was registered in the past 2 years and are applying for a mortgage of 85% of the total property value, then the maximum CCJ allowable would be around £2,500. A CCJ in the last 12 months should be no more than £1,000.

There are some lenders that will consider higher values, but they will require you to have a higher deposit amount.

Borrowing required

If you have a healthy deposit, then you are more likely to be eligible. Essentially, the most deposit you have, the better your chances.

With a 25% deposit, you could still secure a mortgage even if you have a CCJ registered in the past 12 months.

Number of CCJs

Leaders won’t just look at the amount on the CCJ but also the number of CCJs you have. A single CCJ is less of an issue than 2, and most lenders won’t consider those with more than 2 CCJs registered in the past 2 years.

Lenders are looking for indicators that you could be a high-risk borrower and also want to ensure that your mortgage is affordable.

Is the CCJ repaid?

Most people don’t realise that you can still get a mortgage, even if the CCJ remains unpaid. An unsatisfied CCJ doesn’t automatically mean that lenders will rule you out for a mortgage. Paying off might give you wider access to more lenders, but there are still some lenders that will consider your application, even if the CCJ remains unpaid.

Sometimes, retaining the money for a bigger deposit makes more sense than paying off the CCJ.

The type of mortgage

There are many different types of mortgage and the kind that you choose could impact your eligibility for a mortgage. A standard purchase mortgage offers the best chances of success with a CCJ on your record. Likewise, a remortgage application is likely to be accepted provided you meet the other requirements such as a healthy deposit and regular income. A secured loan against an existing property offers some of the best chances of success for an applicant with a CCJ.

If you are applying as a first-time buyer, the lender might have further restrictions for applicants with CCJs. For example, they might want to see evidence of satisfactory rental payments or they might place a limit on the CCJ amount of around £1,000.

Buy to let mortgages are perhaps the most difficult to access with a CCJ, but again, it isn’t impossible. In most cases, the lender will require a much larger deposit, or they might make you wait for longer than with a residential mortgage.

Your whole credit profile

A CCJ is an indicator that one or more of your loans went unpaid. Lenders recognise that it’s easy to get into financial trouble and that people shouldn’t be punished forever for falling behind with payments. This is why most lenders will look at your credit profile as a whole when making lending decisions. Late payments in the past 2 years can be overlooked if you have a healthy deposit of above 15%. More severe issues such as IVAs, repossessions or bankruptcy can be a lot more problematic.

When shopping around for a mortgage, it helps if you have a complete picture of what situation you are in. Download your credit file from the three different UK credit referencing agencies so that you have a complete overview of how lenders look at you. If you only had one credit account and this resulted in a CCJ, it’s important that you start building up your credit as soon as possible. Lenders want to see a track record of you making payments on time. Time can heal most issues on a credit report, so the sooner you start demonstrating that you can be responsible with money, the better.

Affordability

Above all else, lenders look at the affordability of the loan. They want to make low-risk lending decisions and so they want to lend to people who can afford the repayments. They will look at your income, your existing commitments and make a decision on how much they are willing to lend. Most high street mortgage providers will offer around 5x your annual salary, but when you are working with more niche mortgage providers, this might be reduced to 4x your annual salary.

Check your eligibility for a mortgage with a CCJ

The following table outlines the different conditions and considerations that lenders take into account when making lending decisions. As you will see, a higher deposit means that a CCJ will have less impact on a lending decision. Likewise, time can help to heal most issues with your credit.

Lender	LTV*	Date of CCJ	Date paid off	Other factors
1	95%	All CCJs over 3-year’s old ignored. Declined if registered in last 3 years.	Does not need to be repaid.	No other adverse credit history. Occasional late payments permitted.
2	85%	2 allowed in the last 2 years. No more than £1000 in the past year and up to £2,500 in past 2 years. Ignored after 2 years.	Does not need to be repaid.	Maximum of 2 late payments per month and 2 defaults permissible. No other adverse credit history.
3	80%		Does not need to be repaid.	Maximum of 2 late payments per month and 2 defaults permissible. No other adverse credit history.
4	75%	No defaults in the last year.	Does not need to be repaid.	Only considers adverse credit history from the past 12 months.

*Maximum loan to value

As you can see from the table, different lenders will approach CCJs in very different ways. The theme that links all of these situations is that a CCJ doesn’t have to mean the end of the road for your mortgage application. You don’t even have to wait six years for it to be removed from your record if you have a healthy deposit and your credit report is otherwise clean.

When shopping around for a mortgage provider that will accept CCJs, it’s important to shop around just as you would with a regular mortgage. There are plenty of niche mortgage providers out there that will still consider your application, so don’t assume that you can’t get a mortgage if your first application is rejected.

Building your credit with a CCJ

If you need to work on building your credit up following a CCJ, there are a few simple steps you can take to speed the process along.

It can be difficult to apply for new credit cards and bank accounts with a CCJ, so focus on the ones that you have. Try to always remain within your credit limit and don’t use more than 50% of your credit allowance at any one time.
Focus on making payments on time and building up a track record of good behaviour on your accounts.
If you have a credit card, use it wisely. Paying off your credit card in full every month is an excellent way to build your credit score. Use your card for everyday payments such as food shopping and transport and then pay it off every month.
Make sure everything is up-to-date, including your address details and your open accounts. Leaving accounts open at old addresses is a red flag for many lenders, so make sure everything is paid off and then closed.
Query anything that doesn’t look right. It’s not uncommon for people to be landed with additional CCJs for small amounts, such as old phone bills that weren’t disconnected properly. You might not even be aware of these if the registered address isn’t up-to-date. If something on your credit report looks wrong, don’t be afraid to query this with the company and ask for written confirmation if something is wrong.

While CCJs on your record might not be ideal, it doesn’t mean that you can’t get a mortgage so you should never give up. Work on building your credit and ask for help from the right people if you are serious about getting a mortgage.

Repairing and Building your Credit for a Mortgage

The following advice is based on the experiences of the advisors working for us. The actual credit checking process used by lenders is unknown and difficult to predict. Credit checking agencies provide the basic information and it is down to the lenders to interpret this information.

The information laid out below can help you to improve your credit score, but this doesn’t guarantee that you will be accepted for a mortgage.

If you’ve found this page via a Google search, chances are you have been turned down for a mortgage. If this is the case, don't panic. Every lender has their own unique criteria for assessing your credit score and financial situation. Even people will flawless credit scores can sometimes find it difficult to get mortgages with one provider but have no troubles with another. This means you may be eligible for a mortgage, you just haven’t found the right provider yet.

The factors outlined below can help to increase your credit score, which in turn is a strong signal to lenders that you are responsible borrow. Failing to achieve one of these components is unlikely to make you ineligible, but it might mean you need a bigger deposit or that you can only borrow 4x your income rather than 5x your income.

The first step to repairing and repairing your credit report is to find out where you stand. You can access your credit file for free using any of the following websites. As there are three credit checking agencies in the UK, it’s worth signing up for all of the free credit score sites as this will help you to gather a more complete picture.

Sign up for a free trial with Check My File, Experian and UK Credit Ratings.

It’s a common myth that you will be penalised every time a credit search is completed. This is true. You can check your own credit report as many times as you want and this will never be taken into consideration by lenders. It’s only applications for credit which will show up on your credit profile.

A mortgage advisor will be able to read between the lines of your credit report and tell you which lenders are more likely to accept your mortgage application.

What if I have no credit history?

People often assume that having no credit history is a good thing. After all, this means that they have never been in debt. In reality, this couldn’t be further from the truth. When trying to decide if they should lend you money, lenders want to see that you have a track record of being able to make repayments regularly and on-time. If you never borrow any money, they have no evidence of this.

Even if you don’t need to borrow any money, it’s still a good idea to get a credit card. You can use the card for everyday purchases like your weekly shop or petrol. It’s also helpful when shopping online as a credit card will offer additional protection. Set up a direct debit to pay off the card in full every month and make sure you never go beyond your credit limit. This is one of the best and easiest ways to build up a strong credit score.

Here are some further steps you can take to repair and build your credit for a mortgage…

Check everything is up-to-date

The first step should be to make sure that everything is up-to-date. Go through your file and check every detail. Pay close attention to your open accounts and make sure that they are all current. If you have old accounts still open, make sure you pay them off and get them closed. You should also ensure that you address is up-to-date and that you don’t have accounts listed at old addresses.

Challenge mistakes

If you have mistakes on your file related to things like payment history, arrears, CCJs or defaults, challenge these with the provider. If you are correct, you can ask them to provide written confirmation of the error and also ask them to update the information with the relevant credit checking agency.

Get on the electoral roll

The electoral roll is the best way to confirm your address. Make sure you are present on the register and that your details remain up-to-date. If you move house, make it a priority to update your address on the electoral roll and with your bank. This is how banks keep track of you and can make you a more attractive lender if they have a complete address history.

Don’t miss monthly payments

If you have a credit history scattered with late payments, this will reflect poorly on your credit score. Even just one missed payment can negatively impact your score. Make sure you make payments on time every month and try to keep this up for 6-12 months before making your mortgage application. Even if you have a history of late payments, an extended period of making sure everything is on time can help.

If you are declined credit, wait to apply again

When you are declined credit, this credit search will show up on your credit application. If you make another application in a short space of time, the second one will likely be rejected. Avoid making too many credit applications in a short space of time. Wait around 6 months between credit applications if possible.

Keep your spending in check

As a general rule, you should never be using more than 50% of your total credit limit. This includes things like credit cards, overdrafts and store cards. Credit cards should be paid off in full at the end of the month. You should also avoid your overdraft if possible. It’s helpful to be able to use your overdraft for occasional emergencies, but you should avoid remaining in your overdraft when possible.

One of the biggest risks with being close to your credit limit is that it’s a lot easier to go over your limit from this point. Regularly going over your agreed spending limit reflects very poorly on your credit rating.

Settle all debts

The key to clearing debt is to focus on the most expensive one first. This is usually your credit card, but if you have high-interest loans, it might make more sense to focus on these first. Working towards clearing debt and closing accounts can help to improve your credit score.

Even if you have something in your credit history like a CCJ, the sooner you can get this paid off, the better. A CCJ that was cleared one year ago might be a big concern for lenders, but if it was cleared four years ago and you have a clean history since then, this is far more preferable. Remember, when it comes to credit scores, time can heal most problems.

Focus on one, well-managed account

It’s common for people to have multiple bank accounts which are used for different types of spending, however, it’s helpful if you can focus on building good credit for one account. Move all of your ingoings and outgoings to one account. Having regular income and making regular payments from one account is a great way to build your credit score.

What if I’m on the credit blacklist?

There’s no such thing as a credit blacklist. Everyone has a credit file and this is what lenders use to decide if you are a safe lending option. If you are repeatedly declined credit and you do nothing to change your credit rating, it can start to feel like you are on a blacklist. However, you need to remember that time heals most issues with credit scores. Make the changes outlined above and bring your spending under control and you should see an improvement.

How do I get a mortgage with a low credit score?

Being declined for a mortgage can feel like the end of the road for your dreams of being a homeowner, but this isn’t always the case. If you are declined for a mortgage, there are so many reasons this could happen and the first step is to find out why. Once you get to grips with your credit file, you can then speak to a mortgage advisor who will be able to find the right lender for you. There are even lenders who specialise in poor credit, so don’t give up.

How do credit scores work?

Credit scores don’t tell lenders if they should or shouldn’t lend you money, they merely give the lender the information about your financial situation and habits. It is then down to the lender to decide if they think you will be able to keep up with the repayments. Lenders have to show that they have been responsible in their lending decisions and so they look at your financial history as an indicator of future behaviour.

Speak to an Advisor to see how they can help.

I’m Self Employed AND I’ve Previously Been Bankrupt. I Can’t Get a Mortgage...Can I?

Ordinarily speaking, in a scenario where someone has previously had bad credit, such as discharged bankrupts or they hold self-employed status, the chances of getting a mortgage approved are very slim indeed. However, the notion of being a homeowner shouldn’t be dismissed out of hand, as there are options available, even when it seems that the cards are stacked against you.

Working For Yourself

There are in excess of 5 million people working on a self employed basis in the UK, which is a sizeable chunk of the nation’s workforce. It stands to reason then that the major lenders have to cater for this group, which they do, although things are made a little more difficult during the application process. Proof of income is the key in this regard, which is obviously much easier to provide than if you’re a PAYE employee.

Essentially, being self employed shouldn’t stop your ambitions of owning your own home. As long as you have 2-3 years of accounts to prove affordability and between 10-20% deposit to put down, there shouldn’t really be an issue.

What if I’ve Been Bankrupt as well?

This is the factor that most people think is the killer blow to getting a mortgage, but having been bankrupt in the past really doesn’t mean that you can’t get a mortgage. It’s really a question of how long ago your bankruptcy was, whether it’s still showing on your credit file and who you apply for your mortgage with. The fact that you’re also self employed is something of an aside in this regard.

How long ago it was is important, as for most mortgage companies, your bankruptcy will have to be no longer on your credit file, which typically takes a least 6 years to happen, from the date it was first registered

Who you apply to can also be critical, as specialist lenders offer a much greater chance of approval, as they work to a different set of criteria that is based around affordability, not status. Of course, you’ll have to work to improve your overall credit rating once you’ve been discharged from bankruptcy, but with these guys, you won’t be discriminated against for past problems.

**Everyone deserves a second chance, right?**

With more people being declared either bankrupt or insolvent in the UK than ever before, it’s a problem that a record number are having to face. The good news is that you can recover from it and enjoy the kind of financial freedom that allows you to consider buying your own home. It will take a bit of work on your part, but if you can afford the repayments and can prove it, the specialist mortgage brokers we work at Niche Mortgage Info have the access to special deals that you need to make it happen.

So don’t give up on the idea of your dream home until you’ve had a look around our website www.nichemortgageinfo.co.uk. There you’ll find lots of information on improving your credit rating and about the mortgage options available to those with adverse credit.

The Importance of Checking Your Creditor Default Dates

Once you’ve settled your IVA, been discharged from bankruptcy or simply completed your debt management plan….you’ve made it, so congratulations are in order! The hard work of paying back the money you owe is over and you can look forward to a more prosperous and financially stable future.

However, before you get too carried away, there are still some things you need to do in order to help your credit status recovers as quickly as it should. One of those things is checking that your credit file reflects your new debt free status, as it doesn’t always get communicated to all three of the UK’s credit reference agencies Experian, Equifax and Noddle (Call Credit).

What will tend to happen is that when you settle your debt with a creditor, that creditor will inform just one of them and not the other two. Creditors aren’t obliged to inform all three, so it’s down to you, the debtor, to ensure this new state of affairs has been communicated to all of them.

Credit Controller

With any company that you might owe money to, delinquent accounts are the responsibility of the credit controller, so this is the person that you need to report incorrect information to about you or specific default dates. Should your defaults be showing as later than the start of your IVA or bankruptcy, then this needs to be rectified as soon as possible. Typically, your IVA or bankruptcy will be on your credit file 6 years from the date it started. Applying for a mortgage or other types of credit is going to be curtailed if your file is still incorrectly showing as having active defaults after the agreed date.

Write, Don’t Phone

When you do contact the offending creditor, it’s recommended that you do it in writing and you address it to the aforementioned credit controller. If you phone it in, they’ll likely just ask you to write in and if you call the credit reference agency, they’ll tell you to do the same. Save yourself time and stress by writing first. Using an IVA as an example the letter can be wording like the bellow;

re: [account/reference xxxxxxxxxxxxxxx]

I started an Individual Voluntary Arrangement (IVA) on dd/mm/yyyy. You can confirm this by checking the Insolvency Register at https://www.insolvencydirect.bis.gov.uk/eiir/.

I am writing to ask you to correct my credit file for [details of your debt with the creditor, including the account number or reference number]. This debt is included in my IVA.

At the moment [there is no default date shown / the default date is shown as dd/mm/yyyy]. This is incorrect and a breach of the Information Commissioner’s Office guidelines and the Data Protection Act 1998. There should be a default date not later than the start date of my IVA.

Please correct this entry within 28 days or supply me with a written reason why you will not do so.

We’d also recommend that you keep a copy of this letter for your own records, just in case it gets lost in the post! It doesn’t cost that much more to get the letter signed for on delivery, so if you want to make sure your creditor definitely gets it, recorded delivery might be an idea.

In Conclusion

Verifying that the credit reference agencies all have the right information on you is an important job which often gets overlooked. If more people knew the impact of not doing it, then it probably wouldn’t get forgotten as much as it does. At Niche Mortgage Info, we are dedicated to ensuring that people get the information and assistance they need to get on with their lives after financial issues.

For more information on this and all matters relating to getting a mortgage after all types of bad credit, take a look through our website www.nichemortgageinfo.co.uk.

Thanks so much for reading our blog and we’ll see you next time.

Clean Up Your Credit and Improve Your Chances of Mortgage Approval

For those who have come out of the other side of adverse credit issues, the light at the end of this dark tunnel is a welcome sight. Settling your debts to the satisfaction of all of your creditors is a great feeling, but the work of increasing your credit score will just be beginning.

Whether you’ve had an Individual Voluntary Arrangement (IVA), Debt Management Plan (DMP) or been declared bankrupt, your credit score is going to be pretty low, whether you’ve cleared them off or not. If you haven’t yet finished your payments, you will have to wait until you have to work on your score, but the moment it has, you can.

Paying All of Your Bills On Time

What some people don’t realise is that the way you manage your utility bills can have an effect on your credit score, even if you haven’t got to the stage where you’re being threatened with debt collection agencies. If you’re regularly late in paying your gas, electricity or even your mobile phone bill, it can hit your score, which means that pay your monthly bills on time is one of the aspects of your financial management that you need to get right. The best way is to have all of your bills taken care of by direct debit, so you don’t forget.

Get Yourself Some Credit

Whether this feels like something you’d like to avoid or not, getting used to using credit again is important if you want mortgage lenders to view you in a more favourable light. Taking out a bad credit credit card and using 10-15% of the overall available balance will demonstrate your ability to manage credit responsibly over a sustained period.

Avoiding credit can seem like the best option, especially if you’ve had issues with them before, but not using credit at all can work against you, as it will seem like you’re staying away from it because you’re still not able to manage it. Not something that those offering credit really want to see.

A Vanquis Bank Bad Credit Credit Card is something that we often recommend people to take out for this very purpose. We’re certainly not recommending you go back to relying on credit, but managing a low risk, low limit balance (10-15% of your total available) and paying it off each month can give your score a welcome boost.

Another excellent financial product for boosting your credit score is called Loqbox and it operates in a similar way to a savings account. You pay into it your Loqbox for 12 months and you get your money back at the end. As this arrangement is technically seen as a credit agreement, it provides you with a vehicle for illustrating your ability to repay credit. It’s a very popular option for those looking to give their credit status a shot in the arm.

In Conclusion

If you’re recovering from money problems and have ambitions of getting a mortgage at some point in the future, then you need to be looking at not just affordability, but also at helping things along by increasing your credit score. The specialist mortgage brokers we work with at Niche Mortgage Info have access to mortgages designed for people in all sorts of financial situations, but it certainly doesn’t hurt to do everything you can boost your status in the eyes of credit reference agencies like Equifax, Experian and CallCredit.

The more you do in preparation for your mortgage application, the better your chances will be. It can really mean the difference between a no and a yes!

For more information on anything discussed here, take a look through our site www.nichemortgageinfo.co.uk.