Unfortunately events happen in life which can lead to bad credit being registered against your credit profile. Here we discuss how lenders view bad credit, what subprime mortgages are available and how to get them.
Where do I find out if I have bad credit registered?
Your credit profile is recorded at credit agencies such as Experian or Equifax. You can visit these websites and request a copy of your credit profile. There is a company called Check My File which shows data from both these agencies in one credit report.
Why would bad credit have been registered against me?
Bad credit such as missed payments are registered against you as a result of you not keeping to the term of the agreement you took out with the credit provider. For example – if you took out a loan for 5 years, but during this period you did not make several payments on time, more than likely you have ‘missed payments’ recorded on your credit report.
If you missed many payments in a short time frame it is likely that the lender then registered a default against you and if they then went to court to try and recover the money owed this would be registered as a County Court Judgement (CCJ).
Your credit report is a payment history log of all credit that you have had over the last 6 years.
What I can do to improve my credit profile?
Firstly – is all the data correct? Unfortunately sometimes there may be bad credit registered which is an error, so in this situation you should contact the credit provider and request that they update the credit agency correctly. Other things you can do to improve your credit score and profile are:
Always pay your debts on time including your bills as these can also appear also on your credit report.
Manage your credit well and don’t take your credit cards up to their limit as this implies you are living off the credit facility. Always try to clear any debt where possible.
Are you on the Electoral Roll? – This helps as it provides a track record of your identity and address history.
You do need to have some active credit to show that you are able to manage credit.
Dont get too many credit searches done as this can look like you are trying to borrow money from several sources and this may result in your credit score reducing further.
What is the interest rate on subprime mortgages?
The rate offered to you will depend upon many factors such as:
What type of credit did you miss the payment on? If you missed a payment on a mortgage this would be looked upon as a lot more serious when compared to missing a mobile phone contract payment.
When did the miss payments take place? If you missed payments 4 years ago this will have a reduced impact when compared to missed payments happening in the last 6 months.
The size of the debt. The larger the debt i.e. a mortgage payment will carry more weight when compared to a mail order with a balance of £200 for example.
Have you managed to resolve the missed payments? If you have managed to catch up with your payments this will help.
How much can I borrow with a subprime mortgage?
Lenders typically lend 4 to 4.5x income, however they will take many things into consideration which may reduce the borrowing, for example:
What credit commitments you have to pay for.
What expenditure you have as a household.
The term of the mortgage.
As a broker we will complete a full income and expenditure review to understand all your outgoings and then we will be in a position to recommend a mortgage which is affordable.
What deposit would be needed for a mortgage?
You would need to provide a larger deposit when compared to getting a mortgage with a high street lender. The deposit required will be a minimum of 15%, however the more subprime your credit history the larger the deposit would be needed to be put down as you would be classed as a higher risk.
How to arrange a subprime mortgage?
This is an area we specialise in and would really like to help and give you advice around arranging a mortgage. Please complete the above enquiry form where you will then be able to request a telephone appointment with a mortgage advisor. Alternatively you can call us directly.
This refers to a mortgage which is available to clients who have bad credit registered such as missed payments, defaults, county court judgements &/or previous bankruptcy / Individual Voluntary Arrangement (IVA).
You will have to provide a minimum of 15% deposit, however it could be more. It all depends upon when the bad credit was registered, what type of credit was missed, have you since resolved the credit issue. Working with an experienced broker is important to find you a mortgage.
These mortgages are provided by specialist mortgage lenders which are typically available through mortgage brokers. At The Money Hub we specialise in this area and have a large panel of lenders who provide subprime mortgages to clients.