Does Bad Credit Affect Applications For Mortgages

Does Bad Credit Affect Applications For Mortgages?
Bad Credit is​ another way of​ describing a​ negative credit score .​
a​ credit score can be either good or​ bad and is​ used by lenders to​ determine whether you​ are likely to​ be able to​ keep up the​ payments on​ something like a​ mortgage.
Your credit score is​ calculated using a​ mathematical formula and information from banks or​ lenders from who you​ have had a​ loan of​ some sort .​
The formulae and reports consider your bill-paying (credit) history and compare it​ alongside the​ credit history of​ millions of​ other people .​
The resulting figure is​ used as​ a​ ‘risk assessment’ by potential lenders .​
This in​ turn can have either a​ negative or​ positive effect on​ your future borrowing.
A good credit score will typically be given when someone has borrowed money,​ but made all the​ payments back and on​ time,​ without any defaults .​
This person will be looked at​ as​ a​ potentially desirable customer as​ there is​ little risk involved in​ their paying back the​ loaned money .​
Applications for loans,​ or​ remortgage and mortgage applications,​ should be approved relatively quickly and a​ good rate of​ interest offered.
A bad credit score will typically be given to​ someone who has been unable to​ make payments on​ time in​ the​ past .​
They may have defaulted on​ a​ loan,​ had a​ County Court Judgement made against them or​ even been declared bankrupt .​
Credit cards,​ existing loans and other indications of​ your bill-paying history can be taken into consideration,​ generally over a​ two-year period,​ although bankruptcy can influence a​ credit score for much longer.
Current and potential earnings are also factors that help determine a​ credit score .​
Lenders for such things as​ a​ mortgage or​ remortgage will view anyone with bad credit as​ a​ potential risk and the​ interest rates offered will usually reflect that risk by being much higher .​
Some applications may even be turned down.
Some lenders specialise in​ bad credit mortgage arrangements or​ remortgage schemes for those with bad credit histories,​ but it​ is​ advisable to​ research the​ intricacies of​ these propositions before going ahead with them .​
Different lenders operate different policies and it​ is​ worth ‘shopping’ around to​ see if​ they offer facilities to​ pay more when finances allow,​ or​ even so-called ‘payment holidays’.
As the​ credit score is​ based on​ ever-fluctuating factors,​ it​ is​ possible for someone with bad credit to​ alter their score over a​ period of​ time and affect it​ positively,​ thereby lessening themselves as​ a​ risk in​ the​ eyes of​ lenders .​
Careful financial management is​ required: the​ meeting of​ repayments on​ time,​ paying off outstanding debts and generally ‘keeping an​ eye’ on​ all things financial can raise a​ bad credit score into the​ positive bracket.
A copy of​ your current credit score is​ obtainable and it​ should be checked to​ see that the​ information determining a​ score is​ accurate .​
Some people with bad credit may be suffering unnecessarily under the​ influence of​ debts that have actually been paid off or​ even discover themselves to​ be the​ victims of​ identity theft,​ where someone else is​ using their bank details for their own purposes – consequently damaging their credit score as​ well as​ stealing from them.
Does Bad Credit Affect Applications For Mortgages Does Bad Credit Affect Applications For Mortgages Reviewed by Henda Yesti on January 31, 2018 Rating: 5

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