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Can you get a mortgage with a low credit score?

Can you get a mortgage with a low credit score?
June 15, 2022 Amy Cooper

Though securing a mortgage may once have felt like a pipe dream for those with adverse credit, growth in the specialist lending market now means increasingly flexible approaches are available to borrowers. The expert mortgage advisers at George Square Financial Management explain more.

If you’ve been rejected by the high street banks for having bad credit, it may feel like your dream property has fallen out of reach. But this might not be the case.

YouGov data reveals that 17% of Brits have had an application for a financial product rejected due to a poor credit history, while TSB suggests it could be as high as 1 in 4. With people struggling with adverse credit making up such a significant demographic, mortgages are now becoming much more open to clients with lower credit scores.

What is adverse credit?

Credit is when you make a purchase or borrow money under the agreement that you will pay later. A lender’s willingness to let you use credit is based on trust that you’ll repay what you borrow, along with interest charges, on a schedule you agreed to when you accepted the loan or credit terms.

There is no definitive answer to what ‘adverse credit’ is. Broadly speaking, adverse credit will arise if you do not repay your debts according to your borrowing agreements. Certain factors will negatively affect a credit score, such as missed payments, county court judgments (CCJs), defaults, individual voluntary arrangements (IVAs) and bankruptcies.

Securing a mortgage with adverse credit

As each mortgage company has its own criteria, people with a whole host of credit issues can still succeed in a mortgage application. There are specialist lenders on the market who will accept applications from clients with defaults, CCJs and even bankruptcies. These do not necessarily need to be satisfied either.

Here at George Square, we have helped people with multiple credit issues to buy their homes. We have access to whole of market products, which means we can secure mortgage deals with both high street lenders as well as specialist lenders that can often help when others can’t.

Improving your credit score

The best day to start improving your credit score is today. Lenders are more likely to accept your application if they can see improvement in your credit history over time. Some tips for improving adverse credit include:

  • Satisfying your credit liabilities. This will increase the number of lenders available to you.
  • Keeping up with the payments for any arrangements (Debt Management Plan, IVA etc). This shows lenders that the credit issues are in the past.
  • Review your credit score regularly.
  • Add a note of correction onto your credit file through the credit agencies to explain the reasons around the problems.

A final tip is to try not to panic. There are mortgage lenders out there for most circumstances, and we are here to help you through the house-buying process.

Get in touch today and start the process towards your dream home.

For a free, initial consultation with one of our mortgage advisers in Nottingham, call 0115 947 5545 or contact the team here to arrange an appointment.