The Impact Mortgage Application Has On Your Credit Score
Your credit score is something that is important when applying for a mortgage. Having a lending institution run credit checks on you can be daunting. It can be a nail-biting experience, especially if you are acutely aware of your history of adverse or a credit score that has seen better days. There’s also the additional concern if your mortgage application is declined based on the result; applying for a mortgage or any other finance can further negatively impact your credit score. You need to ask yourself, if you are already on shaky grounds where your credit file is concerned, should you be applying for a mortgage? Your answer should be, after seeking the right advice.
How can we help?
At Connect Mortgages, we understand the challenges and frustrations faced by individuals who have struggled to secure a mortgage or are burdened by “your credit score”. Our team of mortgage specialists is dedicated to providing excellent advice and assisting clients in achieving their property ownership goals.
If you’ve given up hope of getting on the property ladder or finding a way to escape the high-interest rates imposed by your current lender, we’re here to help. We specialise in understanding your unique situation and have extensive knowledge of lenders most likely to approve your application. We aim to provide you with the best possible advice for your specific circumstances without exacerbating your financial situation.
Within our mortgage hub, we have a team of adverse credit specialists who can provide invaluable input for your application. We are well-versed in working with clients with less favourable credit profiles and can navigate the complexities of securing a mortgage in these situations. By leveraging our expertise and connections, we can place your application with lenders with flexible criteria tailored to applicants with adverse credit.
Our fact-finding process is designed to gather all the necessary information to present your application in the most favourable light to potential lenders. We understand that each client’s situation is unique, and we take the time to assess your individual circumstances, financial history, and goals. This enables us to identify the lenders who are most likely to provide favourable terms and conditions based on your specific requirements.
Our ultimate aim is to help you secure a mortgage that meets your needs and improves your financial situation. We prioritise transparency, honesty, and finding the best solution for each client. Working with Connect Mortgages gives you access to our expertise, extensive lender network, and commitment to delivering outstanding service.
If you’ve been struggling to secure a mortgage due to adverse credit or high-interest rates, we encourage you to contact us today. Our mortgage specialists are ready to listen, understand your situation, and provide tailored advice and solutions. We believe everyone deserves a chance to achieve their property ownership goals, and we’re here to support you.
What are my chances?
Your chances of securing a mortgage, even with adverse credit reflected in your credit score, are quite positive. While mortgage lenders do view adverse credit as a risk factor, there are several ways they can offset this risk and still provide you with mortgage options: 
- Larger Deposit: Lenders may require a more significant deposit from you, which means you would borrow less and reduce the loan-to-value ratio. A larger deposit can help mitigate the lender’s risk and increase your mortgage chances.
- Higher Interest Rates: It’s important to note that mortgage rates for adverse credit applicants may be higher than standard products. Some lenders operate a tiered rate system specifically designed to accommodate various levels of adverse credit. While the rates may be higher, finding a mortgage product that suits your needs is still possible.
- Demonstrating Financial Responsibility: Lenders will want to see that you have taken steps to settle any defaults or arrears and have a plan in place to pay off outstanding debts. They may have conditions related to the timing of the default or County Court Judgment (CCJ) registration and may set a limit on the amount of outstanding debt they are willing to accept.
- Explanation of Adverse Credit: Lenders may ask for an explanation of how the adverse credit events occurred in the first place. Providing a clear and honest explanation can help lenders understand your circumstances and make a more informed decision.
It’s important to note that evidence of arrears on a previous mortgage or secured loan can significantly impact your mortgage application. However, if you have no missed payments in the last 12 months, lenders are still likely to consider your application. With our extensive panel of over 170 lenders, Connect Mortgage Advisers can help source the best mortgage product based on your credit score.
By working with Connect Mortgage Advisers, you can leverage our expertise and lender network to increase your chances of securing a mortgage despite your credit score. We will assess your situation, consider the lenders most likely to accommodate your needs and guide you towards the best possible product, considering your credit score.
If you’re concerned about your chances of obtaining a mortgage due to adverse credit, don’t hesitate to contact Connect Mortgage Advisers. We can provide personalised advice, help you navigate the process, and explore mortgage options from various lenders. With our support, you can increase your chances of obtaining a mortgage and achieving your property ownership goals depending on your credit score.
Should you buy a house now or wait to improve your credit score?
Deciding whether to buy a house now or wait to improve your credit score is a personal decision that depends on your individual circumstances and priorities. To help you make an informed choice, let’s consider the pros and cons:
Pros:
- Plenty of Choices: Currently, numerous options are available in the housing market, and many lenders are becoming more flexible when considering applicants with adverse credit. This means you have a wider range of choices and opportunities to find a suitable property and secure a mortgage.
- Starting Your Homeownership Journey Sooner: Buying a house now allows you to embark on your homeownership journey sooner rather than later. Homeownership can provide stability, the freedom to personalise your living space, and the potential for long-term financial benefits, such as building equity.
Cons:
- Higher Interest Rates: If your credit history is less than perfect, you may encounter higher interest rates when applying for a mortgage. Lenders may view adverse credit as an increased risk, resulting in higher borrowing costs. It’s important to consider the impact of these higher rates on your monthly mortgage payments and overall affordability.
- Larger Deposit Requirement: A lower credit score may also lead to a requirement for a larger deposit. Lenders may ask for a more substantial upfront payment to offset the perceived risk associated with adverse credit. This means you’ll need to have a larger sum of money saved or be prepared to wait until you can accumulate a sufficient deposit.
Ultimately, buying a house now or waiting to improve your credit score depends on your financial situation, long-term goals, and personal preferences. If you have the financial means to afford higher interest rates comfortably and meet the deposit requirements, purchasing a house now may be a viable option. It allows you to enter the property market and potentially benefit from future property appreciation.
On the other hand, if you have concerns about the affordability of higher interest rates or are determined to improve your credit score to secure more favourable mortgage terms, it may be wise to wait. Enhancing your creditworthiness can lead to better interest rates, lower borrowing costs, and potentially more attractive mortgage options.
To make an informed decision, it is advisable to consult with a Connect Mortgage Adviser. We can assess your financial situation, provide personalised advice, and help you determine the best action. We have the expertise and access to a wide range of lenders, allowing them to guide you towards the most suitable mortgage options based on your current credit score and financial goals.
Remember, buying a house is a significant financial commitment, so it’s essential to carefully evaluate your circumstances and make a decision that aligns with your long-term financial well-being.
Mortgage applications and ways you can look to improve your credit score
- Register with a credit referencing agency and download your statutory credit report for free. Check to make sure the information is correct. It can take up to 28 days for them to respond to a dispute.
- Make sure you’re on the voter’s roll. The electoral roll confirms that you live at the address on your application. It can take 6 – 8 weeks for this to improve your credit score from the date you first registered.
- Make sure your rent payments are kept up to date. Some lenders will apply to the housing association or council for reference.
- Use Experian Boost – this allows Experian access to your current account information. Up to 66 points can boost your credit score if you use this tool.
- Make sure you use only ‘soft searches’ for any new credit. Avoid multiple applications – this can make you look credit hungry and suggests that previous applications have been declined.
- Keep your credit card balance low – owing more than 90% of your credit limit can knock as much as 50 points off your Experian score.
- End financial associations with ex-partners – if they are in a less-than-perfect financial situation, this can impact you.
- Avoid county court judgments and bankruptcy – being declared bankrupt, entering into an Individual Voluntary Arrangement (IVA), or having a county court judgment against you will harm your creditworthiness. According to Experian, a CCJ can knock 250 points off your score, and defaulting can result in a 350-point reduction.
- Pay more than the minimum on your credit card each month.
- Don’t miss payments – one missed payment can reduce your score by as much as 130 points.
You may have to combine the above factors to address issues over time before seeing a significant difference. However, it’s always a good idea to talk to someone in the know, and you would go right in speaking with us today.
