Buying a house or a piece of property is a major decision, and if you have decided to go for it, good for you. Having your own piece of property can improve your life in many ways, but it can also have a drastic effect on your finances for years to come if, that is, you aren’t careful with the mortgage deal you choose. This is why it pays to do detailed research on your options and where you stand financially before you make that leap.
But if you have done your research and have found out that you have bad credit, this can affect your approval for a mortgage as well. Are you determined to get a mortgage even with bad credit? It’s entirely possible, but there are certain steps you should take in order to help your application. Here are the best steps you can take to improve your application for a mortgage even with bad credit.
Know what you are dealing with
If you have bad credit, it pays to know exactly what it is and what the details are. By knowing the details of your bad credit (whether it’s missed utility bill payments or late loan payments, which can result in a default; a County Court judgment or CCJ, or a past bankruptcy), you can face the issue head-on and will have a better idea of what to do. You can check your credit through three organisations, namely Experian, Equifax, and Callcredit. Make sure the reports you receive are correct and there are no errors. In some particular cases, it may be a better idea to wait before applying for a mortgage so that you can have access to better mortgage deals. You should speak with a qualified and experienced mortgage advisor like one from Mortgage Wise so that they can give you advice on whether or not you should go for it or wait for a while.
Steps to take
- As mentioned, you may want to take your time. Some events on your credit record may be considered less severe after a certain period, particularly if your current financial circumstances have vastly improved
- Begin repairing your credit rating or history – you can do this through consistent and prompt payments as well as the responsible use of credit
- Try to save a higher deposit so you can be looked at as a mortgage applicant with a lower risk
- Make sure you have a stable and steady income
- It may also be wise to consider properties with a lower cost, so you can save for a higher deposit more easily
- Don’t be afraid to be honest regarding your financial circumstance or situation. Banks and lenders will carry out checks and searches, so if you try to hide bad credit, this will present you in a worse light
- If you have an explanation for your bad credit, be ready with it. Lenders will likely want to know why you had bad credit in the first place, but they will also want to know what you have done since that time.
Image attributed to Pixabay.com