The Truth About Bad Credit Loans And Mortgages

The Truth About Bad Credit Loans And Mortgages

The Truth About Bad Credit Loans And Mortgages
Many people will have the​ experience of​ facing financial difficulties at​ one time or​ another for a​ variety of​ reasons .​
Being a​ little short of​ money can result in​ you​ falling behind with bills,​ bank loans,​ credit cards,​ mortgage repayments and alike.
This in​ turn can lead to​ having defaults,​ County Court Judgements (CCJ’s) and even bankruptcy .​
Even if​ the​ problems are short lived they can still tarnish your credit record and make it​ difficult for you​ to​ obtain finance.
There are no accurate figures on​ the​ amount of​ people that get turned down for a​ mortgage from a​ high street lender,​ but it​ is​ widely estimated that it​ is​ about 1 in​ 5 .​
Generally this is​ due to​ minor misunderstanding and can often be resolved .​
But even after this it​ is​ estimated that one in​ eight people will not be able to​ get a​ main stream mortgage and have to​ go to​ a​ specialist lender.
Why Do People Get Turned Down For Credit?
There are a​ number of​ reasons and situations for which someone will be turned down for a​ mortgage .​
It may simply be that the​ applicant has put down some incorrect details on​ the​ application form .​
Another reason might be that your previous landlord did not bother to​ confirm that you​ used to​ pay the​ rent on​ time.
Another more serious reason that people get turned down for a​ mortgage is​ that they do not have enough credit points .​
When you​ apply for a​ mortgage the​ lender will carry out a​ credit check on​ you.
You will gain credit points for a​ number of​ reasons for example if​ you​ have had the​ same address,​ job and bank account for a​ long time .​
Also people that keep up to​ date with repayments will gain points as​ well .​
But you​ will lose points if​ you​ have defaulted on​ debts,​ fallen behind with bills,​ have CCJs or​ have been made bankrupt.
What Can you​ Do If It Happens to​ You?
If you​ do get turned down for a​ mortgage or​ loan the​ first thing you​ should do is​ find out why .​
If you​ did fail a​ credit score the​ lender may not tell why,​ the​ credit agency that they used will know .​
It may be a​ mistake on​ their part,​ or​ an​ old default that should no longer be on​ your file.
The best thing to​ do is​ to​ get hold of​ your credit record from one of​ the​ agencies .​
The three main agencies are Equifax,​ Experian and Call Credit .​
If there is​ some kind of​ mistake then you​ can get it​ sorted.
Another reason that you​ may get declined a​ mortgage or​ loan is​ because you​ have not built up enough credit history .​
If this is​ the​ case then it​ might be an​ idea to​ take out a​ couple of​ good credit cards (there are always good deals to​ be had) .​
Use them to​ purchase things and pay them off straight away.
What If you​ Have Had Serious Credit Problems?
If a​ high street lender turns you​ down for a​ secured loan or​ mortgage,​ then you​ will need to​ look towards the​ sub prime or​ bad credit market place .​
These specialist lenders have a​ vast array of​ bad credit loans to​ cater for people in​ a​ variety of​ different situations .​
Whether it​ is​ just a​ defaulted credit card that happened 12 months ago for £300 or​ a​ recent CCJ for which you​ still owe thousands .​
Whatever your situation is​ the​ chances are you​ will be able to​ find a​ lender.
Generally the​ worse your credit history is​ the​ higher the​ rate of​ interest you​ will pay,​ this is​ because you​ pose a​ higher risk to​ the​ lender .​
For example if​ you​ have two CCJs you​ will pay higher rate than someone who has a​ single default .​
The good news is​ that you​ have plenty of​ choice,​ there are thousands of​ deals out there for people with credit problems.
The easiest way to​ find a​ deal and suitable mortgage or​ loan product is​ to​ use a​ broker .​
The broker can carry out a​ credit search and based on​ the​ results they will be able to​ determine what your best options are .​
The majority of​ the​ bad credit lenders are not household names .​
Some of​ these lenders are owned by American companies and others are subsidiaries of​ high street lenders.
Getting the​ Best Deal
As previously mentioned the​ worse your credit history is,​ the​ higher the​ interest will be .​
If you​ have a​ light bad credit history,​ then as​ long as​ you​ keep up with repayments then you​ might be able to​ switch to​ a​ mainstream deal after two years.
If you​ have heavy bad credit history then you​ may have to​ wait three years before switching lenders .​
So for this reason it​ can be advisable to​ avoid products that tie you​ in​ for long periods.
So when the​ deal comes to​ an​ end,​ and you​ have kept up with your repayments you​ should look to​ move to​ a​ standard deal,​ possibly with a​ high street lender .​
Hopefully by this time your bad credit history will be long behind you.

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