If you have a bad credit rating then getting a loan can be difficult. If you take these steps, however, then you can improve your chances of being approved.
1. Apply to lenders who don’t use credit scoring
Some lenders do not use credit scoring, which means you will get to talk to a real person and put past mistakes behind you.
2. Avoid lender mortgage insurance
When you take out a loan of more than 80% of the property value then you will need insurance. If you can front 20% of the value, however, then you can avoid this and are more likely to be approved.
3. Demonstrate change
If you can demonstrate that you have changed and are meeting all payments on time then you can strengthen your position. Show that you are making regular savings and your application will be bolstered.
4. Use a specialist lender
There are specialist lenders who can lend to you based on a higher element of risk. If the mainstream lenders aren’t able to help, you should seek specialist providers who may still be able to offer you a great deal to get your foot in the door.
5. Seek professional advice
Speak to a professional mortgage broker before you do anything else. It is important to seek professional advice because a mortgage broker will be able to help you to find a loan without damaging your credit score further. You should consider how you can improve your financial position before you apply for a loan and debt consultation may be recommended to improve your credit score.
6. Shop around
You should never settle for the first mortgage you can get because this can cost you a great deal of money in the long run. Instead, you should shop around to find the best deal. Remember not to actively apply for a mortgage, however. You should shop around in principle, but not actually apply until you’re ready. To do so will mean that your credit score is damaged if you are turned down.
Getting a loan with bad credit is possible, but you need to be smart. Seek advice from a mortgage broker to improve your chances.