Adverse credit is a term used to describe a poor or bad credit history. Adverse credit history can have a considerable impact on the likelihood of being accepted for a mortgage and the interest rate you are offered. Adverse credit is any kind of negative information on your credit report. If you have adverse credit, it is essential that you take steps to improve your overall credit score to ensure you can get the best possible outcome when taking out a mortgage in the future. If you are looking for ways to manage credit then there are several ways to do this.

There are ways to improve your credit such as:

1.      Pay utility bills on time

2.      Don’t miss any repayments for loans or credit cards and make all monthly repayments on time.

3.      Pay off loans and credit cards if you can – Close down unused credit, for example a credit card you no longer use

4.      Get on the electoral register

5.      Don’t miss mortgage payments

The most important step in improving your credit score is to take responsibility for your finances and make sure you pay all of your bills on time. This is one of the most significant factors when assessing someone's creditworthiness and ensuring timely payments, will go a long way in improving your credit rating.

It is also important that you check your credit report periodically as this can help you identify any errors that may be negatively impacting your credit score. If you do spot any discrepancies, it is important to contact the relevant lenders and get them rectified as soon as possible.

What impact will adverse credit have on obtaining a mortgage?

If you have unpaid debts, it is important to try and resolve them as quickly as possible. Contact your lenders and explain your circumstances in order to come up with a payment plan that works for everyone. Settling your debts will show you are taking responsibility and managing your money responsibly, which can have a positive impact on your credit rating.

Minor credit issues like one missed payment won’t stop you from getting a mortgage but if there is something on your credit report such as a CCJ (County Court Judgement) or you have recently been declared bankrupt this may hinder your chances of being accepted for a mortgage. If you have been rejected for a mortgage elsewhere then LTC Mortgages will assess your financial situation and will provide you with all options available to you.

Some lenders specialise in adverse credit mortgage applications, you will have higher interest rates available to you as this type of negative information on your credit file doesn't fit other lenders' lending criteria.

Credit problems can affect any sort of lending and credit agreements, it is always beneficial to do a regular credit check so if there is adverse credit recorded on your file then you'll be able to speak to the credit card companies/loan providers or the credit agency to sort out any bad credit history.  If you find anything that isn’t accurate, dispute this with the relevant credit bureau.

What does adverse credit history mean?

This is when you have something on your credit profile which can impact your chances of getting a mortgage. Poor credit history can be caused by a number of things such as missed payments for more than one month, if this is an ongoing thing it can make the situation worse, and it can impact your chances of getting any further credit such as a loan or credit card.

There are different things that can have a negative impact on your ability to get a mortgage, these are:

1.      Missed or late payments on credit arrangements

2.      Mortgage arrears

3.      Past repossessions

4.      Bankruptcy

5.      Had a county court judgement (CCJ) in the last six years

6.      Debt management plans or Individual Voluntary Arrangement (IVA)

Finally, it is important to be aware of any changes in the market that could affect your financial situation. Interest rate rises or changes to borrowing regulations could have an effect on your ability to take out a mortgage, so make sure you stay informed and up to date.

Improving your credit score is essential if you are hoping to get accepted for a mortgage, and taking the right steps can make all the difference. Ensuring good payment history, checking your credit report regularly and settling any unpaid debts you have can all help improve your credit rating and give you the best chance of being accepted for a mortgage. Being aware of changes in the market can also help ensure you are in a good position to take out a loan. By taking these steps, you can be confident that you will get the best possible outcome when applying for a mortgage.

By following these steps, you can make sure that adverse credit won’t stop you from getting the mortgage you need. Taking responsibility for your finances and improving your credit profile is essential to ensure you get the best outcome when taking out a loan. 

Credit report

At LTC Mortgages we will request a credit report from you, we use Check my File as this shows all credit from the main three credit agencies which are Experian, TransUnion and Equifax, this gives us a more accurate insight into your credit history as we will assess all credit reference agencies, we don’t just look at your credit score we also look at what’s on the credit file as this is most important.

Any bad credit or outstanding debt may need to be improved or paid off before you are accepted for a mortgage. The lender has to feel comfortable with your circumstances when they look to lend money to you for a property as they want to ensure you are able to repay the monthly payments.

We are based in Liverpool, West Derby, if you would like to contact us to discuss your options then pop into our office or you can call us on 01516620188 or email us at [email protected].