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.
The Truth About Bad Credit Loans And Mortgages The Truth About Bad Credit Loans And Mortgages Reviewed by Henda Yesti on June 28, 2018 Rating: 5

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