How Your Credit Score Affects Your Mortgage Options
Why a Good Broker Matters
When it comes to trying to secure a mortgage, your credit score plays a huge role. Not only can it be the difference between you being approved or not, but it can also affect the kinds of deals you are offered and ultimately, what you will pay every month.
Regardless of the type of buyer you are, understanding the impact of your credit history will really help you. Another thing that can help is working with a broker who specialises in bad credit mortgages. So, let’s look at everything you need to know!
What Is a Credit Score?
A credit score is a number which shows your creditworthiness. In layman’s terms, this means how reliable you are when it comes to borrowing money. Your credit score is calculated by looking at your financial history, and things like the following will be taken into account:
- Your repayment record on loans and credit cards
- How much credit you’re using compared to your limits
- Whether you’ve had any missed payments or defaults
- The age of your credit accounts
- Any public records such as CCJs or bankruptcies
What is classed as a good credit score will vary between credit reference agencies, but for Experian, it is 721-999, Equifax is 531-1000, and TransUnion is 566-710. The higher the number, the better, so always bear that in mind.
How Your Credit Score Affects Your Mortgage Options
There are a number of ways in which your credit score can affect your mortgage options. Lenders tend to reserve their most competitive mortgage rates for applicants with strong credit scores. If your score is high, you’re more likely to be approved for mortgages with lower interest rates, smaller deposit requirements, and more flexible repayment terms
In contrast, a poor credit score may limit your choices or mean higher monthly payments, as well as needing to have a large deposit saved up. You’re seen as more of a risk, so the lender will be working to protect themselves. That’s why boosting your credit score and working with a specialist bad credit mortgage broker is so important.
Why Working with a Great Mortgage Broker Makes a Difference
Navigating your mortgage options if your credit score is less than ideal can feel hopeless at times. You don’t need to give up, though; you just need expert help instead! When you work with a trusted bad credit mortgage broker, you will benefit from their access to a really wide pool of lenders. A broker will know which of these is more likely to work with a buyer like you, and will target those. The result? A much lower chance of rejection from the start.
A skilled broker will carefully assess your credit report and offer personalised advice. They’ll explain your options clearly and help you to understand what kind of mortgage you can realistically expect to get. They will also highlight any steps you can take to improve your score before applying, and when the time comes, they will ensure that your application is presented in the best possible light.
What Next?
Your credit score can make a lot of difference when it comes to getting a mortgage, but a low score doesn’t mean the end of the road. With the right help, you can realise your dream of owning your own home.
