What affects my credit score negatively?

There is no denying that between the cost of living and soaring house prices that buying a new or first home is challenging.  And if you have a poor credit score, the prospect can seem bleaker still.

Well, raise that head, turn the corners of your mouth up into a smile and read on because your mortgage journey is not necessarily over.

Whilst a low credit score makes obtaining a mortgage more complicated;  it is not impossible.

What affects my credit score negatively?

There are several factors – these include:

  1. Payment history.

Missed payments, defaults and County Court Judgments will occur when you miss repayments on items including phone bills, credit cards, bank loans and so on. These are the main contributor towards lower your credit score.

  1. How much you currently owe.

If you are heavily committed at the time of application this will also affect your credit score. Lenders will be concerned that you might over-commit even if you have an impeccable payment record thus far.

  1. Length of credit history.

Generally, the longer you’ve been taking credit, the higher your score. This is because lenders can build up a full profile of your repayment history.

  1. Your borrowing mix.

If you have a range of borrowing, a car loan, credit card and student loan for example this is favourable for your credit score.  A portfolio of credit cards only may show that you struggle to manage your finances on a monthly basis but a range as indicated here indicates good financial management.

  1. New credit and new credit enquiries.

If you’ve had a series of enquiries then you may be seeking credit excessively and possibly be have been declined credit on several occasions. This affects your credit score negatively.

 

What can I do if I have a bad credit score?

There are some things that you can do to improve your likelihood of a mortgage offer in principle:

Save a bigger deposit – this means you are borrowing less money from the lender – and therefore you become less of a risk.

Find a guarantor – if you have a family member who is willing to be named as a guarantor, many lenders will look favourably on this as their risk is minimised.

Fix your finances – postpone buying a home until you are in a stronger financial position.  Build your credit rating back up, making yourself safer to lenders – this will also mean access to more competitive rates.

Speak to a financial adviser – we have a greater understanding of the mortgage market and experience in helping people in similar positions. We will be able to give you advice on the right product for your needs and how best to apply for it.

If you have a low credit score and considering buying a home, why not talk to us here at First Mortgage Solutions? We can give you advice and find the right mortgage for you at the best price.

Contact us via info@firstmortgagesolutions.co.uk today!

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