If you have a bad credit rating, then getting a mortgage can be quite difficult. However, it is important to realise that it is not impossible and that you should persevere until you find a lender that is willing to take you on. The process of applying for a bad credit mortgage is very different to applying for a standard mortgage. The lender you are approaching will want to look into your background in a lot more detail than they would for someone with a good credit rating. Things they are likely to want to look at are your credit report, the amount of debt you are currently in, your employment history and current income. They will also look closely at the amount of liquid assets you have available to you
The lender will want to look over your credit report, your employment history, your income, and the amount of debt you are carrying. Lenders will also look closely at available cash. This is the one area where things can go in your favour, as the more cash you have and are able to put down as a deposit, the more likely a lender is to lend the balance to you, even if you have a bad credit history. This is for the simple reason that you will have made a significant investment in the property and are therefore much less likely to default on your loan. However, your payment history is also very important at this stage too. Even if you do have a significant amount of money to use as a down payment, if your payment history shows you don’t keep up with regular payments, and that you have a record of defaulting on payments of loans then this is going to ring alarm bells for any lender. It is easy to build up a good payment history, you just have to be disciplined.
If you are unable to get regular credit due to having a poor credit rating and payment history, then it is worth looking into taking out a credit card designed for people such as yourself. The do exist, but they will have very high interest rates and low credit limits, a reflection of the risk the lender is taking issuing the card. Use this to build a good payment history by making a couple of purchases a month on it and paying off the balance in full every month – never overspend, only make purchases that you actually have the money for, the idea of this credit card is to improve your credit rating so you can get a mortgage, not get you into more debt and cause more damage to your credit rating! This simple process can give you the payment history you need to prove to a potential lender that you are capable of making regular payments, and are ready to commit to being a more responsible creditor in the future.
