I have been declined for a home loan, can I apply again?

There could be many reasons why a lender has chosen to decline your application if you have bad credit as they all have their own lending criteria you need to meet. Mainstream lenders do not always have the knowledge and expertise to offer a mortgage for someone with an adverse credit history which is why we recommend using a specialist bad credit lender. Some lenders may decline your type of bad credit whilst others will offer a much more flexible approach. 

The first step to getting a home loan with bad credit would be to check your credit history yourself by downloading your reports from the three main credit reference agencies used by lenders in the UK: TransUnion, Equifax and Experian. This way you can find out what the bad credit is that is negatively impacting your applications whilst also checking all your data is up to date and correct. Sometimes, there may even be inconsistencies on your file for accounts you know you have satisfied. If this is the case then you can ask the lender to file a notice of correction which should help boost your credit score in time. 

There are a few credit myths out there we recommend you be wary of to improve your chances of obtaining a home loan with a history of bad credit, such as:

• Payday loan can help your credit score – This is not true as payday loans do the opposite. It shows lenders that you struggle to manage your finances and need to rely on short term high cost borrowing. 
• A home address can be ‘blacklisted’ by credit reference agencies from a previous owner – Incorrect. A previous resident’s financial history will not impact yours or anyone living with you.
• Checking your credit a lot can damage your credit score – This is more ambiguous as it really depends how you use credit checkers. As long as your searches are soft searches and not hard checks your credit score should not be impacted. 
• Credit history is based on your income – Your income can be linked to how you manage your money and the size of lending that you are offered, it does not impact your actual score. 
• Marriage merges your credit reports into one – Having joint financial commitments such as a current account or a mortgage can impact your rating if the other person does not manage their finances well, but you will still have your own credit report and score individual to you.
• You have to wait until 7 years has passed to boost your credit score – Certain negative marks on your history such as IVAs, CCJs, repossessions etc can take 6/7 years to drop off your report but you do not have to wait that long to apply for a home loan or improve your score.

I have bad credit; how much can I borrow?

You would need to talk to a broker to get a true indication of how much you could borrow for a home loan when you have bad credit as all situations will be different. If you have a lot of adverse credit you may be asked to provide a much larger deposit to be given mortgage options. This is because the more you put down the lower your loan to value will be. Your loan to value (LTV) is a ratio of how much of a deposit you provide against what you need to borrow against the value of the property. 

For example, if you purchased a house at £200,000 and you put down a deposit of £20,000 your loan to value would be 90%.

If it is not a possibility for you to put down more money you will still have options but you will need a broker to analyse your credit report. Lenders may look more favourably at an application where the person only has missed or late payments versus someone with a history of bankruptcy and CCJs.

Do I need a broker to get a loan with bad credit?

To put it simply the answer is yes! This is so important as your bad credit needs to be matched with the correct lender. An adverse credit history comes with a lot of complexities that are difficult to navigate without any support. Also, some bad credit lenders work exclusively with brokers and cannot be found on the high street, which means without a broker you could miss out on the right mortgage and interest rate for you.

Our bad credit mortgage brokers have vast experience helping customers with all types of adverse history. Fill out the contact details below and we will match your situation with the right broker. Let our superheroes take the stress and the worry away and find you a mortgage as soon as possible.