IMB Blog

First Time Buyer with Bad Credit

Bad credit can be referred to as a person’s inability to pay his/her bills in a consistent manner in accordance to the due date. What this means is that the person is not able to make payments timely. Bad credit results in a low credit score. Any score that is less than 580 points is considered to be a bad credit score. Credit score is a direct representation of your financial abilities and opportunities. People that have bad credit scores have difficulties in borrowing money. This is because they are considered to be a high-risk borrower. In other words, a low credit score reflects that he/she might not be able to completely repay the loan in the prescribed time period. Anyone who has a credit card or has borrowed money is likely to have a credit file created by a credit bureau. Information such as the amount of money borrowed, number of transactions made and timely or late payment of bills allow these bureaus to assign you a credit score. Credit score allows for any lender to assess that either you are creditworthy or not. The credit score is made up of five main components;

  1. 35% = payment history
  2. 30% = total amount an individual owes
  3. 15% = length of a person’s credit history
  4. 10% = mix of credit types
  5. 10% = new credit

Owning a house is the easiest way to accumulate wealth. Having your first house is an experience like nothing ever before. The first time you buy a house you feel really proud. It is a sense of accomplishment that further allows you to excel in life. Mortgage is an easily way to buy your house as one can have a monthly payment schedule while enjoy the aesthetic feeling of owning the place. Mortgages just work out as a real estate loan.

As mentioned earlier any kind of loan requires for a good credit score. A credit score between 580 to 669 is considered to be a decent credit score. If you want to have low interest rates on your mortgage plan, it is extremely vital for you to have a good credit score. A good credit score ensures lending at a low interest rate, low down payment and flexible payment plans. This leads up to the question that what happens when a person has a bad credit score? Is he or she denied a mortgage plan? Shouldn’t all people have their own homes?

Well, the answer is that bad credit puts you in trouble but you can still make it through and get a mortgage loan for your house. Since, bad credit means that you were unable to make timely payments previously, a very limited number of lenders provide you with loans. Hence it can be said that you have got very less options in terms of acquiring a loan. But not to worry, everything is possible in this world. You might not be getting loans by the main stream banking services but there are still other options. There are a number of bad credit lenders that lend money to people with bad credit. Not only do they give loans but they are also lenient with your mortgage applications.

To get a mortgage with a bad credit history as said before is not impossible but it requires some extra efforts. Firstly, time. The more time you give to your mortgage application the better. You should deeply plan on how to move with the payment schedule, either you would be able to make payments throughout the plan or not. Do you have a stable source of income? Does the loan you are applying for comply with your fiscal budget. Adding on, you also need to make conscious effort alongside planning. So, create a profile that represents that you can pay up consistently. Having a mortgage advisor can really help with this. The profile should reflect that you are a responsible credit user. We can help you in building such a profile through our skilled and expert advisors. Mortgage advises are usually not free. But at Independent Mortgage Brokers, we provide with free and online mortgage advice. Our team consists of highly trained and dedicated individuals that can help you in building your profile just as one of their own.

Time can also heal the worst wounds. Thus, if you have a bad record in the past give it some time so that it blemishes. Do not apply for a mortgage if you have had a recent bad credit experience.Honesty is the key principle here. Be honest with your lenders, do not hide any kind of bad credit as they conduct thorough research and it found be eventually be found. In order to look clean, you should be open about any and every kind of credit. Similarly, have an explanation for bad credit scenarios. A thought out and well composed explanation is always better than random statements. An advisor can help you in formulating one.

Since you are already a high-risk borrower, try to reduce the threat. This can be done by agreeing to offer a higher down payment / deposit and reduce the loan size. Having a stable source of income also helps as it shows that you can pay the loans. Look for properties that are in line with your financial status. If you have any form of pending loans make sure that you sum up all the monthly payments, subtract it from your and earnings and then look for property accordingly. It is not always beneficial to move into a big house directly. You can move into a smaller house for some time and when you are financial more stable you can move to a bigger place. Furthermore, you can split the loan with your partner. This means that you make your partner a part of the mortgage deal. This can help as now the credit score of your partner would also be assessed and it can make up for your bad credit.

Having a mortgage is a big responsibility so make sure that you can completely pay the monthly installment otherwise the situation might get tough and you would end up losing your first home. With great power comes great responsibility-be wise. You can always contact us at Independent Mortgage Brokers for any and every kind of advice on mortgage. Feel free to get in touch with us, our advisors are always at your disposal.


More News

The 5 Benefits That You Get From The Independent Mortgage Brokers Company

The 5 Benefits That You Get From The Independent Mortgage Brokers...

When buying a house, getting a good mortgage deal could be difficult if you have bad credit. For this reason, you need to find…
What Do You Need To Know About The Mortgage Solutions In The UK?

What Do You Need To Know About The Mortgage Solutions In...

The world economy was already on a downward path, and then came the Russian invasion and the sections that the west had imposed, this…
Finding The Best Mortgage Broker When You Have A Bad Credit Score?

Finding The Best Mortgage Broker When You Have A Bad Credit...

When you have a low credit score, it can make finding a mortgage that fits your financial goals extremely challenging. Unfortunately, this is something…

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.

Fill in the details below and we will get in touch with you to discuss your requirements.