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Can I Secure a Mortgage As a First-Time Buyer With Bad Credit?

It would be confusing, and stressful to find a first-time buyer mortgage alone if you have bad credit. If you are thinking, ‘how can I get a first-time buyer mortgage with bad credit?’, then could begin by working to improve your credit score. The way you are going to do this will depend on your financial and personal situation. The correct mortgage adviser would make the difference by finding you’re a lender who is happy to provide mortgages for first-time buyers with adverse credit.

How do lenders assess first-time buyers with bad credit?

First-time buyers do not have any track record of mortgage payment history. It makes things complex for mortgage providers as they need to verify your capability of maintaining monthly mortgage commitments. When you do not have any sort of mortgage track record in the UK, lenders consider your other existing credit commitments to validate your credit worthiness. Lenders usually refer the information provided by credit reference agencies to assess first-time buyers’ credit profiles.

Bad credit is when an applicant does not pay their utility bills or other credit commitments on time frequently or does not pay back any debts that they owe. Bad credit affects your credit score, which is the history of all your credit decisions in the past, both positive and negative.

Having bad credit and a low credit score can affect your ability to obtain future credit, like mortgages or loans. Banks and lenders see people with a low credit score as less trustworthy and less likely to pay back debts, so it is essential that you check your credit score, and if it is low, take steps to fix it.

The best way to get a mortgage with bad credit is to improve your credit score and try to have good credit in the future. When you have a better or improved credit score, a talented mortgage adviser would work his magic to find you a suitable mortgage deal!

What should the first-time buyers do to improve the credit score?

  • Update the electoral roll

Registering to vote at your current address can improve your credit score, which will give you a better chance of getting a mortgage. If you move around a lot, this can impact your credit score, and the longer you stay at a property, the better your credit score will be. Although, of course, this is also dependent upon other factors too. You can register to vote by going on the relevant government website for you, entering your details and clicking submit. It is easy and will go towards increasing your credit score.

  • Settle all the utility payments and other credit commitments on time

One of the best ways to improve your credit score is to pay off any debts and bills on time. Make sure you pay your overdraft fees, direct debits and credit card payments on the due date rather than after. Having a good credit score is based on meeting all your credit payments, so prove to mortgage providers you can pay them back on time to be considered. Spending money on a credit card and paying it back on time can help to build a credit history, but only do this if you have no pre-existing debt and are confident you can pay it back on time. There is no point in getting into debt to try and improve your credit history.

  • Check with the credit providers on clearing your defaults

You should connect with the credit providers once you fully settle any defaults. They will help you to update your credit information with the credit reference agencies. It will help the mortgage application for first-time buyers. This also shows lenders that you are taking action and want to improve, which will help them believe you are reliable and will pay a mortgage back on time.

How to gain the confidence of the mortgage provider as a first-time buyer with bad credit?

You should not lie to mortgage providers about your credit history, as extensive checks are run when you apply for a mortgage, and these will be uncovered. It is likely that you will lose any chance of a mortgage if you lie, as this looks like you are covering up. Even if you are nervous or think your bad credit will affect your application, the best thing to do is to be honest about it. A mortgage broker will try to work with you, and it is imperative you let them know your personal circumstances so they can do this to the best of their ability. Mortgage brokers will not be judgmental and will have seen it all before.

First-time buyers should check their connected party details

Other people’s bad credit and bad financial decisions can affect your credit. For example, if you have accounts connected to a partner who is in debt, this can affect your credit rating. If you are a joint account holder for an account an additional holder has run up debt on, you could be liable. Check if you have any joint accounts or joint debts and if you can separate yourself from the other party. You may still be liable for some debts, and always check this, but the sooner you do this, the sooner you can improve your own credit without someone else pulling it down with theirs.

How can I get a mortgage with bad credit?

If you have taken some of the steps above to improve your credit rating, and want to find out if you can get a mortgage with bad credit, you should discuss this with a mortgage broker. They can discuss your options, although there is no guarantee you will get a mortgage, even if you have tried to improve your credit rating.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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