Category: Bad Credit

Accurate credit information is vital for your borrowing profile. Lenders use your credit report to predict whether you’re trustworthy and can make timely payments.

Missing payments adversely impact your creditworthiness and can have far-reaching consequences, including refusal when you apply for different kinds of lending.

However, you can sometimes remove missed payments under certain circumstances.

Read on to learn about your options for removing missed payments from your credit report to help improve or maintain your credit score.

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What Are Missed Payments?

When you borrow or open an account with a creditor, you agree to make monthly repayments for the borrowed amount on a particular date. You’ll have a missed payment when you fail to make the payments you owe to a creditor.

Most lenders allow a grace period of 30 days after you miss the due date before making a report to credit reference agencies. However, agreements can differ among lenders, so ensure you review the terms of your deal to avoid being caught off guard.

Can You Remove Missed Payments from Your Credit Report?

Yes! You can remove missed payments from your credit report if they have been recorded inaccurately.

You also have the right to try removing missed payments from your credit report if they were on an account fraudulently opened in your name.

Generally, you can’t remove a missed payment from your credit report if you missed a payment and the lender is accurately reporting the issue.

However, some lenders can understand if you have extenuating circumstances surrounding the missed payment. For example, if you missed payments due to a medical emergency or natural disaster.

The creditor can agree to remove the late payment if you’ve brought the account current again and have a good history of making other payments on time.

Related bad credit guides: 

• Mortgage with a bankruptcy 
• Buy to let mortgage bad credit
• Can you get a mortgage with an IVA
• Mortgage with a debt management plan

How Can You Remove Missed Payments from Your Credit Report?

You can identify and remove missed payments from your credit report through the following steps:

Step 1: Review Your Credit Reports

The first step is downloading and reviewing your credit reports for details about the missed payments record.

It will help you identify which credit reference agency is reporting the issue, the actual accounts reporting missed payments, when they were reported, and the amount you missed.

Step 2: Determine if the Missed Payments Are Reported Accurately

Check the reports for errors regarding your payment dates or outdated information. You can also review your financial records about the account with missed payments to see if there is a discrepancy.

Creditors shouldn’t make a missed payment report to credit reference agencies if you’re less than 30 days past due.

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Step 3: File A Dispute with Your Creditor

You can claim with the creditor or lender if you believe there is an error on your credit report.

Contact the creditor who reported the missed payment directly and include any document proving you paid, such as a bank statement or payment verification email.

The creditor will conduct an investigation. They’ll update the credit agencies to correct or remove the missed payment record if they agree there was an error.

Step 4: File A Dispute with Credit Reference Agencies

You can also dispute errors and inaccurate information on your credit report with each credit reference agency. Once you file a dispute, the agency will contact the creditor for verification.

You can submit disputes with all agencies simultaneously to avoid delays in correcting all your credit reports. After concluding its investigation, the agency will verify and remove the missed payment from your credit report.

How To Remove Missed Payments Tied to Fraud

Bad actors can fraudulently open an account in your name, and it can have missed payment records. The missed payment record can be accurate, but you’re not responsible for the fraudulent account.

In such cases, you should report identity theft and suspicious credit applications to the police. You must also contact CIFAS, the UK’s fraud prevention service, for protective registration.

You can then contact the creditor’s fraud department, informing them that the account was fraudulently opened in your name.

Submit copies of the reports to help support your dispute. Once the creditor verifies that the account was opened fraudulently, they’ll close it and send updates to credit agencies to remove it.

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How Long Will a Missed Payment Stay on the Credit Report?

Credit reports show the missed payment record for six years after the creditor records it. As such, even a single missed payment can have long-lasting consequences on your creditworthiness.

Multiple missed payments will generally have a more significant impact.

However, the impact reduces over time since lenders pay attention to your most recent credit history. You can improve your scores by making future payments without fail and avoiding additional missed payments.

The missed payment record disappears from your credit report after six years, provided it’s fully settled. Repaying the debt can also help reduce its impact before the six years are up.

Recommended reading: 

• Getting a mortgage with bad credit.
• Remortgages for debt consolidation.
• Mortgage application declined.
• Mortgage after repossession.

How Can You Avoid Missed Payments on Your Credit Report?

The following tips can help you avoid getting missed payments on your credit report:

Set Up Autopay or Direct Debits

Set up autopay or direct debits and ensure enough money in your account to avoid accidentally missing payments.

With such setups, the minimum monthly payments leave your account automatically so you can meet your obligations on time.

They offer peace of mind since you don’t have to worry about remembering to make payments.

Create A Budget

A realistic budget can ensure you don’t overspend and chip into your loan repayment funds. Assess your spending habits when creating the budget and set aside extra funds to cover unexpected costs.

Contact the Creditor

Reach out to your creditor as soon as you realise you’ll miss a payment. They may have hardship options like lowering your minimum payment amount or allowing you to skip a payment to ensure you don’t fall behind.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

You can remove missed payments from your credit report if they were added by mistake or due to fraud. Lenders can also agree to remove the record if the missed payments resulted from unavoidable circumstances.

A default is one of the more severe consequences of missing payments on different kinds of credit, including personal loans, credit cards, and mortgages.

The implications of a default can be long-lasting since it stays on your credit record for six years, making it trickier to borrow money.

Thankfully, a default will not stay on your credit file forever. Read on to learn more about defaults and how to get a default removed after six years.

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When Will a Default Be Listed on Your Credit Report?

A default doesn’t simply appear from the blue. It’s a negative payment marker or entry placed on your credit file due to recurring missed payments, which means the lender has reported the unpaid debt. You’ll not immediately get a default as soon as you miss a payment.

Most lenders will get in touch to try and understand why you’ve failed to make repayments on time and what they can do to help you get back on track.

They’ll also attempt to get you to repay by sending payment reminders over a grace period of a few months, usually three to six months.

If the lender feels they’re not getting anywhere after the grace period or you’re not responding, they’ll issue you a default notice before officially recording the default.

A default notice is a formal letter informing you you’re behind with repayments and that your account is at risk of closure.

It gives you at least two weeks to clear the arrears and is your final chance to stop the lender from issuing a default. If you don’t pay by this time, the lender will register a default with their credit reference agency.

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How Do I Get a Default Removed After 6 Years?

If six years have passed since the default was registered, it will automatically be removed from your credit report. The lender won’t be able to re-add it, even if you haven’t settled the debt.

However, some credit agencies can be slow in updating their records.

You may need to raise a credit report dispute to remove the default record if it’s over six years old and still shows on your record. Follow these steps to get your default removed:

Step 1: Download Your Credit Report

Get your credit report to see which credit reference agencies show the default. All credit agencies offer free trials on the first instance, so you can use them to check your report.

Step 2: Contact the Credit Reference Agency

Once you identify the agency showing the default, contact them to request default removal and argue your case. Tell them why it should be changed and ensure you have a right to contest the default. Keep any relevant evidence handy to support your claim.

Step 3: Get A Notice of Correction

Once you request the default removal, the agency will contact the lender to check the accuracy of the data.

The agency will put a ‘Notice of Correction’ on your file to explain that the default is being disputed. They’ll also inform you of the lender’s response, but you can contact the lender directly for feedback.

Step 4: Report Update

If the lender agrees that the data is incorrect, the agency will update your report and remove the default. The agency will also inform you of your options if the lender disagrees with your dispute.

Related bad credit guides: 

• Mortgage with a bankruptcy 
• Buy to let mortgage bad credit
• Can you get a mortgage with an IVA
• Mortgage with a debt management plan

Can You Remove a Default Before Six Years?

Yes. You can get a default removed from your file within six years in various scenarios. These include:

Credit Report Errors

Errors can occur on your credit file, and you have every right to remove the default if it was recorded by mistake.

For example, you may get a default for another customer with a similar name. In other instances, the lender may have failed to collect payments despite being set up.

If you’re confident the debt isn’t yours, contact the lender with proof and ask them to remove the default from your credit record.

You can also prove that you did not cancel direct debits or a continuous payment authority to the lender by getting evidence from your bank.

You’ve Only Been in Arrears for A Short Time

You can get the default removed if you were in less than three months of arrears when it was recorded on your credit file.

You can ask the lender for a statement of account containing information about your debt and repayment history. You can use it to prove that you were under three months behind on your payments when you got the default notice.

Late Default Filing

If the default was added to your credit file late, it can remain on your report even after six years.

Consequently, it will over-run and appear on your credit file longer than expected. You can contest the late default filing with the lender and have them change it to an earlier date so it can drop off sooner.

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Can You Remove a Default by Repaying in Full?

No. Defaults stay on credit files for six years from the date they’re added, even after full repayments. However, paying off your debt can help you look better at potential lenders and boost your credit rating.

The debt will be marked as ‘satisfied’ on your credit file and will have a less negative impact when you need further credit. It will also help you avoid further court actions.

Recommended reading: 

• Getting a mortgage with bad credit.
• Remortgages for debt consolidation.
• Mortgage application declined.
• Mortgage after repossession.

How Can You Avoid Defaulting?

Avoiding getting a default is easier than removing one. Some tips that can help you avoid defaulting include:

Contacting the Lender

Contact your lender before missing payments for three months or more to inform them about your situation if you’re struggling with repayments. They can work with you to develop a more manageable repayment plan or offer payment breaks.

Understand Your Agreement

Borrowing agreements have clauses stipulating how many payments you can miss before defaulting. Understanding this information can ensure you know when to expect a default and take steps to avoid it.

Maintain a Budget

Create a realistic budget to ensure you don’t overspend. It will help you set aside enough money for repayments and avoid going into arrears.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Final Thoughts

Defaults stay in your credit file for six years and get removed automatically once the period lapses. However, you can get a default removed within six years if it was recorded erroneously.

If you’re earning a decent income but have a bad credit score or shaky credit history, does that exclude you from getting a new mortgage?

Getting a mortgage is a life goal for many people, but those with bad credit often worry that they’ll waste their time applying for a mortgage or will get a terrible rate/deal because their credit history is less than perfect.

According to Statista, mortgages account for a large portion of outstanding debt in the UK.

But planning with the help of a mortgage advisor can help you apply for a mortgage that won’t become a financial noose in the end.

The fact of the matter is that you may have a bad credit score but changed your financial situation since.

Even with a high income, your bad credit rating will remain for a certain period.

This leaves many people on high incomes still saddled with poor interest rates or limited options because of poor credit scores.

That said, you will still have options, but they’ll be impacted by how recent your financial issues have been and how severe your bad credit score is.

Depending on how extreme your situation is, you may need to approach a specialist lender that deals with bad credit mortgages or work on your credit score before applying for a mortgage once more.

Consulting with a mortgage advisor on bad credit good income mortgages can also help you to determine the best course of action for you.

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Why a Healthy Credit Record Is Important

When applying for any sort of credit, the lender will assess your credit report to determine if you’re a suitable candidate or not.

The information found on your credit report will indicate whether or not you’re a risky candidate.

Mainstream lenders will rely heavily on your credit score when determining creditworthiness.

If you have a bad credit score but a good income, using a bad credit mortgage specialist or adverse credit lender may benefit you, as they don’t assign a credit score when assessing the viability of your mortgage application.

That doesn’t mean that adverse credit lenders won’t look at your credit score, but rather that they will consider other mitigating factors, such as your current earnings and how you currently handle your accounts.

Credit records provide potential lenders with an overview of your financial history, such as the money you’ve borrowed and how you’re repaying it, accounts you have and how they’re being managed and so on.

Your credit report will include details of your car finance, personal loans, credit cards, and store accounts.

In addition to this, your credit report will include additional details such as bankruptcy or county court judgements against you.

Are There Different Types of Credit Checks?

Lenders will carry out one of two types of credit checks: soft or hard.

If you’d like a DIP (decision in principle), the lender will carry out a soft credit check.

This helps them determine how much they could lend you based on the information in your credit report.

This includes no further checks, so cannot guarantee an approved loan.

If the lender uncovers other information on you when processing the final mortgage application, you may still receive a rejection/denial. Soft credit checks aren’t visible on your credit report.

The hard credit check is more thorough and is done at some point during the mortgage application, even if a soft credit check has been done before this.

A hard credit check will appear on your credit report, and some lenders view multiple hard credit checks as a sign of a risky borrower.

Is Credit Score the Sole Deciding Factor?

You may wonder if your credit score is the only factor that will influence the outcome of your mortgage application, and the answer is no.

Lenders will look at several things when determining if you’re a suitable borrower, with credit score being just one factor.

Other influencing factors include the following:

Your Income

Lenders will want to see how much you can afford to pay out each month, which means they’ll need to see proof of income.

If you’ve got a high income but apply for a mortgage that will exhaust all your available cash flow, you can still expect to get a negative outcome.

Applying for a mortgage that your income shows you can comfortably afford is one way to avoid possible mortgage rejection.

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Your Monthly Expenses (aka, outgoings)

As important as your income is, so are your monthly expenses.

In addition to your mortgage instalment, you may have other expenses that you pay out each month, such as your vehicle instalment, insurance, daycare, household bills and services, and so on.

Lenders will compare your expenses with your income to determine the risk involved.

Source of Income

Earning sufficient income each month is one factor, but how you earn it is important, too. For instance, stability is important to lenders.

They will want to see that you can sustain your income for your contract.

If you’re employed, you can provide your payslips, or if you’re self-employed, you’ll need to provide your company’s financials along with your bank statements or latest tax returns.

History of Prior Mortgages

If you’ve had a mortgage before or currently have one, lenders will investigate to see how you handled the payments.

If your payments were on time every time, this will show on your credit report.

Any lapses in payments or bad notes on how you handle your existing or prior mortgages can work against you.

How Much You Must Earn to Get a Mortgage

There’s no set amount that any person should earn in order to qualify for a mortgage. It comes down to how much you can afford to borrow.

Lenders will consider any income amount when determining the viability of a loan application. Mainstream mortgage providers will typically provide you with between 3 and 5 times your annual income.

This is if you have good credit. If you have bad credit, you may find that lenders are only willing to offer you less, providing you with the opportunity to prove yourself.

A high income will not negate a poor credit score, but may improve your options as you can put down a higher deposit.

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What is a Bad Credit Score?

There’s no specific number that determines a high or low credit score.

That’s because every credit bureau calculates their scores differently.

Some mortgage providers that deal with adverse credit borrowers won’t score you.

As such, a credit score is a health indicator of your overall finances.

It’s a good idea to get your credit report from the leading bureaus such as TransUnion, Equifax, and Experian, so you know what mortgage providers might see when they carry out a credit check on your name.

A bad credit score will limit your options, but won’t necessarily exclude you from getting a mortgage.

Unfortunately, poor credit scores may mean lower mortgage amounts are available to you, or you’re offered a higher interest rate.

Sometimes, the lender may request a higher deposit amount to secure the deal.

Reasons for Poor Credit Scores

There are many reasons why you may have a poor credit score.

Some of these include:

• Late and missed payments on store accounts, loans, credit cards, and utility bills.
• Going into overdraft on your credit card or bank account without having an approved overdraft facility on your account.
• Using a large percentage of your available credit on your credit card.
• County court judgements against you.
• Individual voluntary arrangements that are still in progress.
• Bankruptcy that’s been active within the past 6 years.
• Multiple hard credit checks on your name, showing that you’ve been struggling with debt and have been seeking out more lines of credit.
• Being linked to a person who has bad credit, such as a marital partner who you have a mortgage or loan with.
• Incorrect information on your credit report (which can be corrected directly with the credit bureau).

How to Secure a Mortgage with Good Income but Bad Credit

There are several things you can do to secure a good deal if you have a poor credit score but a good income.

Some options include:

• Saving up a higher deposit than the standard requested amounts.
• Minimising your debt and outgoings by closing unnecessary accounts and paying down debt.
• Invest in a cheaper property to reduce the amount you need to borrow.
• Use an adverse credit mortgage provider that won’t base its decision on your credit score.
• Settle your CCJs and IVAs to clear your credit and show that you’re making an effort to get back in good financial standing.
• Ensure your accounts, loans, and lines of credit are paid in full and on time.
• Use a mortgage advisor who can ensure that you’re making sound financial decisions that are best-suited to your financial situation.

Can You Get a New Mortgage with Good Income But Bad Credit? Conclusion

Having a high income doesn’t automatically qualify you for a mortgage or the best deals, especially if you have a bad credit score.

Mainstream lenders may view your poor credit as a red flag that you don’t handle credit properly.

Working with a professional mortgage advisor can help you apply with mortgage providers most likely to assist someone with poor credit.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Yes! Aspiring home buyers with a debt management plan may face a few obstacles in the housing market, especially if you’re using debt solutions like a debt management plan.

However, it doesn’t mean that you can’t secure a mortgage, whether you’re currently in a debt management plan or have completed one in the last few years.

You may feel like your options are limited, but they’re always available with the right approach.

Here’s everything you need to know about getting a mortgage with a debt management plan in the UK…

What is a Debt Management Plan (DMP)?

A debt management plan is a non-formal arrangement between you and anyone you owe money to, which bundles your existing debts into one easy to afford monthly payment.

It usually incorporates non-priority debts like unsecured personal loans, credit cards or bank overdraft facilities.

To get a DMP, you still have to afford your rent, council tax, general bills and other living expenses, plus what you can pay towards your non-priority debts.

A DMP isn’t legally binding, and you can cancel at any time and take out new lines of credit.

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How a DMP Affects Your Mortgage Application

You’ll find it challenging to take out a mortgage with a DMP because it impacts your credit score or rating.

All lenders want borrowers who can make repayments on time, and your options shrink if your credit record suggests you can’t do that.

You’ll need a good credit score to qualify for mortgages from traditional and high street lenders like banks.

You’ll likely be rejected if you’re coping with ongoing repayment plans like a DMP or adverse credit issues.

With a DMP, you make repayments according to your plan, which can be lower than what you agreed to on the loan contract.

Since you’re paying less than what you agreed, it can show up as an underpayment on your credit report.

Any other lender you apply to, including mortgage lenders, will view you as higher risk, and they’re likely to refuse your request or charge you higher interest.

How to Get a Mortgage with a Debt Management Plan

If you want to get a mortgage with a DMP, you’ll have higher chances with a specialist lender.

It might be more challenging to apply for a mortgage with an active DMP rather than a completed one, but specialist lenders can help you out.

Such lenders often work with people who’ve had financial issues. It’s unwise to approach lenders yourself when looking for a mortgage with a DMP.

You’ll be leaving it to chance, and this can lead to your mortgage application being declined and more issues on your credit file.

Consulting a mortgage adviser or broker can help you access specialist lenders who are likely to approve your request.

You’ll not find such lenders advertising themselves or the high streets because they often only work with trusted advisers and brokers.

Such lenders specialise in providing bad credit mortgages. They adopt a more flexible and broader view of your situation and finances than traditional lenders.

Instead of focusing on your credit score or past financial issues, they consider your current circumstances.

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Your application is assessed based on the usual criteria, like what you can afford based on your income and outgoing expenses, including your DMP contributions.

Specialist lenders will also consider factors around any other credit problems, like how long you’ve had them and their severity.

For example, if you were recently declared bankrupt or had a county court judgement (CCJ) against you, it can be difficult finding lenders who will accept your mortgage application.

However, if your credit history contains less severe issues like limited arrears or late payments that you have already cleared, suitable lenders might not see this as an issue.

Whichever the case, how long ago the problem occurred can be a determining factor, with older issues carrying less weight than more recent ones as lenders decide.

If you have an individual involuntary agreement, it is still possible to get a mortgage, for more info, check our guide on how to get a mortgage with an IVA.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

How Much Deposit Will You Need When You Have a DMP?

A higher deposit usually means better deals and more lenders when looking for a mortgage.

If you have more severe credit issues, lenders will likely ask for even higher deposits to reduce the perceived risk.

It can often be an issue if you’re already using your disposable income to pay off debts under your DMP because it can be challenging to save up enough money for a deposit.

If possible, you can try other causes of action to raise the necessary funds, like cashing in or selling assets.

However, ensure you get sound financial advice before taking such measures to ascertain how they can impact you in the future.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

How Much Can I Borrow if I Have a DMP?

The loan to value (LTV) ratio, or how much you can borrow in a mortgage offer in relation to the property’s market value, is affected by your credit history.

It’s unlikely to get lenders who offer high LTV ratios of 95% with an active or completed DMP.

You’ll likely find lenders restricting LTVs to 85% of the property value, especially if you have CCJs or a history of defaults. Therefore, you’ll be expected to provide a 15% deposit.

Some specialist lenders can allow you to borrow up to four times your annual income. Others can advance up to five times, provided you don’t have any severe credit issues and can come up with a significant enough deposit.

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How much you can afford when you have an active DMP will be determined by adding the DMP payments as an outgoing expense.

Remember, all lenders are not the same, and they’ll each assess your affordability based on their criteria.

Therefore, it’s possible to get the maximum amount if you approach a suitable lender. How much you earn will also be factored in the assessment and your type of employment.

Most traditional lenders provide limited options for those in non-traditional jobs, so a specialist lender is more suitable if you’re self-employed.

Taking Out a Mortgage with a Settled DMP

A DMP usually stays on your credit record for up to six years, whether or not it’s settled, which can affect your credit score and the lender’s decision.

Your chances of getting a mortgage are higher with a settled DMP than an active one.

If you’ve completed your DMP and are looking to get a mortgage, the first thing to do is ensure you get copies of your credit reports.

Confirm that all the details are correct, including the dates, addresses or electoral roll registration.

You’ll gain valuable validation to your identity when you’re registered to vote, and it will help your credit score so ensure you’re registered.

You also need to confirm that details of your debts and credit accounts are correct, including the dates and amounts and whether they’ve been satisfied or settled.

In case you notice any errors like a fully paid debt that’s not showing as such or incorrectly recorded deficits, then contact the responsible party and ask them to update the debt status.

Although they’re not obliged to, it can be a great help in your status. You can also send a copy of the letter to the leading credit reference agencies like TransUnion.

The final step is to improve your credit score to increase your chances of qualifying.

You can take out small loans and make regular repayments on time or a credit card you can quickly pay off.

To ensure repayments always go through on time, ensure you set up direct debits for your loans.

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Can You Get a Mortgage with a Debt Management Plan Final Thoughts

It’s possible to get a mortgage with DMP, and the best way to get one is through specialist lenders.

A mortgage broker or adviser with access to the whole market can guide you and provide invaluable insight on lenders who are most likely to approve your request.

Give us a call on 01925 906 210 and we will provide you with the best deals available to meet your circumstances and consider any credit history you may have.

With our expert advice, we can guide you through the process and give you the knowledge and confidence it takes to acquire a secured loan that is right for you.

If you have read all the information on secured loans carefully and feel that you want to proceed with a secure loan, get in touch with one of our secured loan experts who can work with you to find the best deal for your needs and circumstances.

If you have a less than perfect credit record, including either a history of or a current debt management plan in place, you may wonder if obtaining a mortgage is even possible.

Fortunately it is possible and in this guide, we will cover the journey and the potential stumbling blocks.

We will cover exactly how to seek a mortgage with a history of missed or late repayments, discharged bankruptcy, defaults, CCJs or IVAs, as well as the hurdles that may be faced for a mortgage applicant in this scenario.

Can I Obtain a Mortgage with a Debt Management Plan?

In short, the answer is yes, although as the debt management plan, otherwise known as a DMP, will have impacted the applicant’s credit score, it’s still possible.

However, it’s important to be aware that there is likely to be some consequences such as a higher interest rate on any mortgage offers, or a lower mortgage value offer.

However, there are lenders on the market who specialise in offering mortgages to those applicants who have had or are currently on a DMP.

The best method of finding and approaching such specialised lenders is via an independent mortgage broker.

The broker can also assist with reviewing the potential mortgage applicant’s circumstances to ensure they meet the criteria before approaching a lender.

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What is a Debt Management Plan?

A debt management plan or DMP is an informal repayment agreement between a person and a non-priority debt lender.

Within the personal finance world, debts are categorised between:

• Priority debts – Those essential bills that if not paid would result in the loss of a provision for example, if the mortgage or rent is not paid, the consequence would be the repossession or eviction of a property.
• Non-priority debts – Those additional credit agreement such as store loans, credit cards or other credit agreements including mobile phone agreements. Non-priority debts are deemed less serious if they default than priority debts.

A DMP can be set up for unsecured, non-priority debts in order to repay the amounts owed via an affordable repayment plan.

A DMP usually involves a company acting as the intermediate party who assists with negotiating with the creditors to set up the plan, as well as streamlining the person’s outgoings.

This allows the amalgamation of the debt repayments into one single monthly affordable payment, which is made to the intermediate company initially, and then they will pay the creditors.

The level of the monthly repayment will be assessed by the intermediate party who will analyse a person’s ability to repay once all essential bills have been deducted from their monthly income.

This includes all living costs such as rent and mortgage, essential bills such as council tax and utility bills.

There is a range of companies that offer to set up DMP’s, however only a handful undertake this service free of charge.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

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It is highly recommended that financial advice is sought ahead of taking out a DMP as there are consequences to selecting this option.

Consumers should be aware that none of the debt is written off when applying a DMP and the interest on the debt is not frozen and therefore by reducing the monthly repayments via a DMP, it can take a significant amount of time to repay the debts.

A DMP is not a legally binding plan and therefore can be stopped at any time by either party.

Also, it is important to be aware that the repayment plan created and offered by the intermediate company can be rejected by the creditors involved.

In addition, another factor to note is that a person’s credit rating will be impacted by the creation of a DMP as the monthly debt repayments will be reduced.

What is the Process of Obtaining a Mortgage with a DMP?

In addition to passing the usual lending criteria when applying for a mortgage, a person with either a current or previous DMP will also be assessed by the lender in relation to how severe the credit issues have been and how recent the issues were.

As we have briefly mentioned, each credit scenario will have a different level of severity on a person’s credit record and credit score.

Another factor on the impact will be the duration of time that has passed since the credit issue took place.

While some issues may be considered less serious such as a late payment, others such as a previous property repossession would be deemed more serious.

In addition, each lender will have varying views and policies on which matters they would consider and which they would not.

Due to the differences between lenders, it is highly recommended that financial advice is sought ahead of any potential mortgage applications.

This is so that the likelihood of being accepted can be discussed and the most appropriate lenders can be approached for the mortgage.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

Why is it Trickier to Obtain a Mortgage with a Debt Management Plan?

People with either a current or previous DMP are likely to find obtaining a mortgage more challenging as lenders will deem the applicants as higher risk.

Lenders will analyse the risk factors involved with each mortgage application, and one element reviewed in this process is reviewing the applicant’s credit score and credit history.

The applicants with the highest score may be offered the highest value mortgage possible in accordance with the lender’s borrowing criteria and the most favourable terms.

However, if an applicant has a bad credit history both the value and terms are likely to be tailored due to the risk levels perceived by the lender.

Although it is not impossible to obtain a mortgage with a DMP, there will be fewer lenders willing to make a mortgage offer.

Therefore to protect a credit score from any further damage from possible declined applications, it is important to seek advice before submitting any mortgage applications.

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How Much Could Be Borrowed if I Have or Had a Debt Management Plan?

Each lender will have different criteria regarding how much they may be prepared to lend, however, the calculation will also depend on the property value for the mortgage to be associated with and how much deposit the applicant can put down.

Mortgage with a Debt Management Plan Summary

Our professional and discrete brokers specialise in mortgages with a bad credit history and therefore if you either fall into this category currently or have done in the past, please get in touch so that your options can be discussed.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

If you have struggled to obtain loans or other financial products in the past, you may have already discovered that bad credit was to blame.

Unfortunately, if you have a less than perfect credit history, this can really impact your ability to secure a range of finance options when needed, including loans.

In this post, we will explore what a credit score is, what bad credit loans are, the common hurdles to securing a loan without a glowing credit history and the considerations that should be made before taking out a loan for those with a bad credit history.

What is a Credit Score?

A credit score is an industry-wide recognised system that assesses how creditworthy an applicant is.

A person’s score is represented as a number often between 300-999 and is calculated by reviewing an individual’s credit history including the following:

• Details of open accounts.
• Records of payment history on current and previous accounts.
• Any information regarding Individual Voluntary Arrangements (IVAs) or bankruptcies.
• Details of any financially related links such as previous partners.

The higher a person’s credit score, the more desirable and trustworthy that individual is as a potential customer to a lender. The score enables lenders to preview potential customers track records in order to decide if they fit their lending criteria.

Should you be concerned or interested in your credit score and the details that sit behind the score itself, a free credit report can be obtained from a number of websites.

The information is usually obtained from the UK’s three main credit reference agencies, and it is always recommended that credit reports are obtained regularly to check the accuracy of the information held.

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Recommended reading: 

• Getting a mortgage with bad credit.
• Remortgages for debt consolidation.
• Mortgage application declined.
• Mortgage after repossession.
• Very bad credit loans direct lenders.

What is deemed a Bad Credit Score?

Unfortunately, there is not a uniform method of setting a score and therefore the major credit reference agencies use a slightly different calculation method to come to their scores. As such, there is not a specific score that is deemed good or bad.

What are Bad Credit Loans?

Loans for those with bad credit a method of funding a large purchase or obtaining a cash lump sum that is repaid monthly during the term of the loan, however depending upon the client’s credit score, this may limit the lenders that will be prepared to offer loans.

Also, it is likely that the interest rate offered on the loan will be higher than the rate that could be offered to those with a good credit score.

If someone with a very bad credit history is seeking a loan, there are other options that may increase the likelihood of a loan being accepted such as:

• Secured loans

A type of loan that enables the additional risks of lending to those with a bad credit history, to be offset by offering an asset as collateral. The lender would have the power to repossess the asset in the event that the loan re-payments have defaulted.

• Guarantor loans

Another option for those with a bad credit history could be to obtain a guarantor loan where a family member or close friend formally agrees to take on the repayments in the event of a default by the applicant.

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What are Loan Direct Lenders?

There is a range of lenders on the market who may be prepared to lend money such as banks, building societies plus a range of other lenders. Sometimes there are brokers who may act as the middleman, managing the application process, whereas direct lenders do not involve brokers and applicants would need to apply directly to be considered for their services.

The main advantage of using a direct lender is that the process is undertaken all by one company and therefore can be simplified as no other contacts are involved, however, there can also be less transparency when using direct lenders, as for example, the underwriting process is not visible externally and you may not be getting the best rate for your needs and circumstances.

There is a wide range of direct lenders that may consider lending to those with bad credit, including quite a few that specifically market their financial products to those with a bad credit score.

When reviewing the companies offering such products it is important to ensure that a short-listed company is reputable and regulated. Also, be aware that the interest rates offered are likely to be higher in comparison to those on the wider market intended for applicants with a good credit score.

Need more help? Check out our quick help guides: 

• Can you get a mortgage with a CCJ?
• How much deposit do you need for a bad credit mortgage? 
• Can I get a mortgage with bankruptcy? 
• Payday loan mortgages.
• Bad credit commercial mortgages.

Very Bad Credit Loans Direct Lenders Considerations

Some lenders may offer a ‘soft search’ which could indicate whether or not a potential applicant would be accepted for a loan. This is a great tool that won’t harm a person’s score when browsing to see what is available, however even if approved via the soft search, there are still a range of factors that should be considered before proceeding as follows:

• Affordability and likelihood of defaulting

The applicant should ensure that they can afford the loan repayments before committing to a loan as any defaults would severely impact their bad credit score even further. In addition, as already discussed the interest rates are likely to be high and therefore the overall cost of borrowing will all add up.

• Credit limits

Often, lenders willing to offer loans to those with bad credit are already taking risks and therefore may limit the amount of credit limit or loan value offered.

•  Credit score

As mentioned, a person’s credit score will be a factor as to whether or not a lender will be prepared to offer a loan and the terms of the loan. Any steps that can be taken to improve a credit score ahead of a loan application will improve the chances of being approved and may decrease the interest rate offered.

Very Bad Credit Loans Direct Lenders Summary

In this post, we have discussed what bad credit loans are and the impact that a credit score has on the financial options for a potential applicant. We have also discussed a number of considerations that should be reviewed before proceeding with a loan.

Should you wish to discuss the financial solutions available to you and your personal circumstances, please get in touch with our friendly team.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Bankruptcy does carry negative connotations and although bankruptcy is very serious and impacts a credit record, it is not a permanent state.

This guide will discuss the duration of time that bankruptcy will affect a credit history and explore the options to obtain a mortgage following the bankruptcy.

What is Bankruptcy?

Bankruptcy is one of a number of types of personal insolvency. Bankruptcy can be used as a tool to clear debts and credit issues however it does come with some strong consequences.

When a person is declared bankrupt their financial affairs are delegated to a Trustee of Official Received who will draft a Statement of Assets and Liabilities to establish how much can be repaid to creditors.

There are positives and negatives when considering bankruptcy. The process will protect the person from the stresses of being chased for debt.

However, there are long term consequences associated with bankruptcy including that some professions cannot practice following being made bankrupt.

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The bankruptcy would be recorded on a personal credit file including details of whether it is active or discharged and the date the bankruptcy commenced.

In addition, the bankruptcy will be recorded on the Bankruptcy & Insolvency Register which can be viewed by anyone, free of charge and therefore could impact future employment, the ability to rent a property or arrange to apply for future borrowing.

When Can a Mortgage be Applied for Following Bankruptcy?

A discharge following bankruptcy will typically complete a year following the event, however, the record of bankruptcy will remain on your credit history for a further six years.

It is generally a waiting game as to when to apply for a mortgage, especially within the immediate years following a bankruptcy as an applicant would be deemed too much of a risk to lenders.

However, by the fourth or fifth year following a bankruptcy an applicant may be able to obtain a mortgage depending on their other personal circumstances such as meeting affordability checks, levels of deposit and records of income and expenditure.

Which Mortgage Lenders Accept Bankrupts? 

There is no list of lenders that are guaranteed to accept a mortgage application after a bankruptcy.

The majority of lenders review and accept mortgages from those who have had discharged bankrupts on a case by case basis.

Lenders will consider a variety of different factors including your income, expenses, credit history and overall affordability.

There are certain steps you can take to improve your chances of getting a mortgage approved.

You should strongly consider seeking the assistance of a mortgage broker if you have experienced financial difficulties in the past.

A broker will be best placed to advise on which specialised lenders would be appropriate and the likelihood of being accepted for a mortgage.

Can I get a mortgage after declaring bankruptcy and being discharged?

Getting a mortgage approved after being discharged from bankruptcy can make the process more difficult, but certainly not impossible.

Typically, high street lenders will be reluctant, but there is usually a range of specialised lenders available.

As well as the number of lenders available being limited, you will usually find that the mortgage deals offered are less competitive since a bad credit mortgage is considered a higher risk to the lender.

For this reason, mortgages offered after a bankruptcy tend to be offered at a higher interest rate than average and many may also request a larger deposit than usual.

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How long after bankruptcy can I get a mortgage?

During a period of bankruptcy, it isn’t unusual to have restrictions imposed on your borrowing.

Bankruptcy terms dictate that you cannot apply for a mortgage until you have been officially discharged.

This usually takes up to 12 months depending on the court’s decision. The more time that has elapsed, the more chance you have of a lender approving you for a mortgage.

Post-bankruptcy, the point at which you will become eligible to apply for a mortgage differs from lender to lender.

If you apply for a mortgage immediately after the point of discharge then you will need to meet very strict criteria, have a substantial deposit, and find yourself subject to higher fees and rates.

As more time passes, the bankruptcy becomes less relevant from the perspective of a lender.

After 4 or 5 years, a lender will most likely see you in the same light as everyone else but more so if your credit history has been clear of any issues since discharge.

You will also find that more lenders in the market will consider an application at higher loan to value rates, the longer you have been discharged.

For example, if you have been discharged over 4-5 years and have kept a good credit record, you may be able to borrow up to as much as 90-95% LTV.

If eligible, these lenders may be able to offer you more competitive rates too.

If you have been recently discharged, then you will find it significantly harder but can still obtain a mortgage through at least a 25% deposit will be required in a lot of cases.

If you’re unsure about your eligibility, please get in contact with one of our specialist advisors to discuss your situation.

Improving a Credit Score

It is highly recommended that while an applicant is waiting for the time to pass following a bankruptcy that they keep a clean credit record, ensuring that all payments are made on time.

In addition, it would be worthwhile taking the time to improve your credit rating by undertaking some simple steps as follows:

• Check your credit report – Request a free report from a reputable credit referencing agency and review the content. If any errors are contained, either contact the company directly or the credit reference agency with whom the report was run to investigate and make the necessary corrections.

It is also worthwhile checking any financial associations listed, and requesting the removal of any old information, such as links to ex-partners.

Also, always remember to cancel a free trial if started to obtain a free credit report.

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• Register to vote if not already done so – By registering to vote you will be added to the electoral roll, which is another record that lenders can check to confirm the identity and address of applicants.
• Apply for credit wisely – Every credit application will leave a mark on your credit file, which other lenders can see, including the history of any denied credit applications.

Therefore there will be a tricky balance between building a credit score and holding off any applications before making a mortgage application.

One approach to manage applications is to use tools that show the likelihood of being granted credit, without performing a credit search.

This provides the applicant with insight into their creditworthiness without marking their credit file.

However, it would be recommended to seek independent financial advice before making any credit applications to discuss the options, benefits and disadvantages during the critical time before making a mortgage application.

• Keep credit usage low – When applying for new credit, lenders will assess the number of accounts of your credit file, not only those with any outstanding balances but also the value of available credit. The optimum level is to keep within 50% of the total credit available, representing that you are successfully managing your finances.
• Build a good credit history – Building a positive credit file shows that you can borrow responsibly, make regular and appropriate payments and remain within the designated credit limit. There are financial products available that are aimed at those who are in the process of recovering their credit file, such as ‘credit builder’ credit cards. Often the interest rates will be very high therefore they are designed for the balance to be paid off in full every month to enable customers to document a pattern of responsible repayments on their credit file.

Deposits for Discharged Bankrupts

Lenders who are prepared to offer mortgages to those with a less than perfect credit history will likely seek to mitigate their risks by request higher deposits.

Typically, applicants with a clean credit history could achieve a 95% mortgage and therefore only require a 5% deposit.

However, these ratios are unlikely to be seen for someone with a bankruptcy listed on their credit file.

Depending on the duration of time that has passed following a bankruptcy, a lender could stipulate that a deposit of between 15% and 25% is provided.

Should this level of deposit be out of reach, there could still be options available such as a gifted deposit from a close family member or a guaranteed mortgage.

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Mortgages for discharged bankrupts summary

Although bankruptcy is a serious decision, the consequences of being declared bankrupt do not last forever!

Should you be rebuilding your credit history with the objective of seeking a mortgage, it would be highly recommended that independent financial advice is sought.

This will enable any changes to a credit file to impact a credit score and to explore the options available on the market to seek a mortgage.

High street lenders will often refuse a mortgage application from someone that has previously been bankrupt even after the discharge, however, there are specialised lenders that would analyse an application further before making a decision.

Financial advisors will be best placed to advise on which specialised lenders would be appropriate and the likelihood of being accepted for a mortgage.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Unfortunately, if you have missed a loan repayment you may have a default on your credit report, resulting in bad credit.

A default is the terminology used when a negative payment record is placed on a credit report due to unpaid arrears.

Typically, when a default is applied, the lender no longer views the person as a customer, but as a debtor instead.

Defaults provide a warning light to prospective lenders regarding the level of potential risk involved as they demonstrate that the borrower has had a previous history of mismanaging scheduled payments.

In this guide, we will explore the impact of a default and the process of obtaining a mortgage with a default on your credit history.

Can I get a Mortgage with a Default?

Firstly, if you are in the position of seeking a mortgage but knowing that you have a previous default recorded on your credit report, it is important not to panic and to understand that every lender will take a different stance.

Defaults are a common reason for a mortgage application to be declined, especially by high street lenders, however simply because one lender rejects a mortgage application, does not mean that it would be the end of the journey.

To either take that first step onto the property ladder or to re-mortgage and move is still possible, it’s simply about finding a lender that has criteria compatible with your circumstances.

There are mortgage lenders that specialise in helping customers that have adverse credit and will help you find a mortgage with defaults on credit file.

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However, should you already have had a mortgage application be declined, it is important to establish the full reasons why so that actions can be put into place to rectify the concerns, before making any further applications.

Each mortgage application would add a further marker to a credit file and therefore the next steps should be carefully managed.

Therefore, at this stage, it would be highly recommended that advice from an Independent Financial Advisor is sought to review the personal circumstances, details of any defaults or declined applications, and offer specialised financial advice to discuss other options available.

Financial Advisors are also best placed to find the most suitable option, on the most favourable terms available due to their insight into the lending market however they must be privy to the full circumstances in order to help, therefore it is always best to be open and honest.

If you have an individual involuntary agreement, it is still possible to get a mortgage, for more info, check our guide on how to get a mortgage with an IVA.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

Are Some Defaults worse than others?

Quite simply, yes. The severity of default will depend on the type of agreement that payments have been missed within.

There are two types of defaults, depending on the type of credit agreements, as follows:

• Regulated credit agreements – A default may occur following a missed repayment and subsequently, the borrower failing to respond to a Notice of Default issued under section 87 of the Consumer Credit Act 1974. Once a default notice has been received, a borrower would have 14 days to make the outstanding payment, or the default will be added to the borrower’s credit report.
• All non-regulated credit agreements – Where agreements are not regulated, a default recorded on a borrower’s credit report represents that the lender has concluded that the relationship between lender and borrower has broken down.

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How Soon After a Default can I get a Mortgage?

A default will remain on a credit report for six years following the event, regardless of any payments made to clear the debt.

Can a Default be Removed from my Credit Report?

If a default reported on a credit report is accurate, it is unlikely to be removed either by the lender themselves or a credit reference agency.

In this case, the default is legally bound to be reported for the duration of six years, after which it will be removed automatically.

However, if the default is incorrectly reported, it can be disputed by directly contacting the relevant lender.

The lender has a responsibility to accurately amend the information if they have made a mistake.

Unfortunately, errors can occur and therefore it is important that credit files are checked regularly to ensure that the information stored on the file is up to date and accurate.

How Soon Following a Default can I Obtain a Mortgage?

The timing of the negative event on an applicant’s credit history will be key.

The longer duration of time that has passed since the default being added to a credit file, will help as the default is less likely to impact the ability to obtain a mortgage and if successful, the mortgage terms offered.

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Can I get a Mortgage with a Satisfied Default?

Unfortunately, as we have briefly discussed, the repayment of the debt does not clear the default on a credit file and therefore the duration of time that has passed since the default was recorded is more of a concern to potential lenders.

However, by satisfying a default, a borrower’s credit score is likely to improve, which may in turn assist the hunt for a mortgage as some lenders will categorise the risk involved slightly differently.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

How Much Can I Borrow If I Have a Default?

Typically mortgage lenders who are willing to lend to those with adverse credit history may have tighter affordability checks than high street lenders which may impact the total value of any mortgage offer.

Should the maximum level of borrowing offered to be limited due to risk factors involved, higher deposits are likely to be needed.

Typically, lenders will offer to lend up to x5 your annual income if you do not have any blemishes in your credit history.

If you have defaults, you are likely to find it difficult to get a mortgage approved, but this not mean it’s impossible.

You will usually need to provide a large deposit and will be offered less competitive interest rates as you are seen as a greater risk.

If your adverse credit history is more than 3 years ago, lenders may be more willing to lend up to 4x your annual income.

How can my income affect getting a mortgage with a default?

The majority of lenders accept 100% of your basic salary, but only 50% of overtime and other additional income.

Some lenders will request a minimum of 3 years self-employment, while others are satisfied with just 12 months.

It’s common for lenders to demand those in employment to have been in their current role for at least 1 year.

The mortgage amount will also be impacted by your outgoings and other financial commitments, as these can impact how much you can afford to pay back each month.

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Should I Check My Credit History? 

It’s always a good idea to check your credit history to see if you have anything else on your file that may negatively impact your chance of having your mortgage approved.

Even though there isn’t a set credit rating that lenders will be looking for, maintaining a healthy credit rating will improve your chances of your mortgage being approved.

Although please note: Different lenders use different credit rating agencies (CRAs) when checking your report.

Therefore, checking your reports at different providers is a good idea as they may vary.

It’s also important to know how many and when any defaults you have taken place.

Lenders will want to know this, as many have a threshold to the amount and severity they will consider.

Where can I find my credit report? 

It’s possible to check your credit history for free once annually from each agency.

So, apart from time, there is no barrier to check the information before you submit your mortgage application, especially if you suspect you may have a history that would lead to being declined.

The report will also show you late payments, arrears and the presence of any CCJs, IVAs or bankruptcies, all important to be aware of when preparing to make a new mortgage application.

How to Get a Mortgage with a Default Summary

We have discussed the factors involved with being issued a default and the impact that defaults have on credit files and the ability to obtain mortgages.

As such, it is highly advisable that a copy of a credit file is obtained before applying for a mortgage to check the report for any inaccurate data.

Details of the credit report can also be provided to an Independent Financial Advisor, who can advise the financial options currently available.

Give us a call on 01925 906 210 to speak to an advisor, or contact us for mortgage advice that’s personal to you and takes your credit history into account.

That way you’ll know where you stand in the mortgage market and we can guide you on your route to securing a suitable loan.

CheckMyFile is a UK credit report service that utilises data from the four major credit reference agencies: Experian, Equifax, Crediva and TransUnion.

CheckMyFile is a privately-owned company that launched in 2000 and promises never to sell on or pass on customers data for marketing purposes.

In this guide, we will take you through everything you need to know about CheckMyFile, including its benefits and potential limitations.

How Good are CheckMyFile?

CheckMyFile aim to provide the most accurate credit report and therefore the site combines data from a range of sources in addition to the major credit reference agencies including;

• The Electoral Roll.
• Registry Trust.
• Various Banks and Building societies.
• Telecoms service providers.
• Other credit providers.

Why are Individuals Given Credit Scores?

A credit score is a numerical representation of an individual’s creditworthiness.

The number provided is usually between 300-999 and is calculated by reviewing an individual’s credit history.

The higher a person’s credit score, the more desirable that the individual is as a customer to a lender.

An individual’s credit history report contains many pieces of information including:

• Details of open accounts and missed payments.
• Information from the Register of Judgments containing details of any Individual Voluntary Arrangements (IVAs) and bankruptcies.
• Details of financial related links such as previous partners.
• Information from public sources such as the Electoral Roll and telecoms companies.
• Ratios of borrowing levels.

The purpose of a credit score is to provide a credit rating system that is used by lenders when reviewing any type of banking or borrowing application.

As a credit score is vital to lenders, individuals should protect and nurture their score, including ensuring that all of the information underpinning a credit score is accurate and correct.

Recommended reading: 

• Getting a mortgage with bad credit.
• Remortgages for debt consolidation.
• Mortgage application declined.
• Mortgage after repossession.

What is a Good Credit Score?

There are differences between the major credit reference agencies and lenders on how they calculate credit scores, including the range of scores available.

Some use a ‘Spring system’ with a credit score range between 0-100 whilst others, calculate scores of up to 1000.

In addition, all lenders will have different lending criteria of what level of credit score they deem favourable and willing to accept customers with and therefore it is tricky to advise of a universally ‘good’ credit score.

How Can I improve my credit score?

Although there is not a universally ‘good’ credit score, credit scores are all impacted by a range of events and activities as follows;

• No history of borrowing.
• Mortgage arrears.
• Late payments, especially a pattern occurring.
• Defaults on borrowing.
• Debt management plans.
• CCJs.
• IVA.
• Repossession.
• Bankruptcy.

Some of the above events will be stated on a credit report for a set number of years and therefore will impact a credit score for a longer period of time however others can be counteracted by improvements to a financial position elsewhere.

There are instant ways to build a credit score should these not have been completed already such as register with the electoral roll.

However, some of the events, such as no history of borrowing can only be rectified slowly, over time.

To build a credit history from scratch an individual could initially open a UK bank account (if they haven’t done so already) and set up a few direct debits for regular bills.

Another tip is to ensure that certain household bills are set up in the individual’s name who is building their credit score.

Unfortunately, building a credit score from scratch takes time as a pattern of borrowing and regular repayments need to be established slowly, over a period of time.

This can also be achieved either by using an overdraft or low balance ‘credit builder’ credit card.

In addition, a credit score can be impacted by errors on a credit report and therefore it is vital to regularly run a report and check the information is accurate.

If you have concerns regarding the duration of time a specific event is retained within your credit report, contact our friendly team who will be able to advise both regarding the specific issue, but also financial options that could be available within the meantime.

Need more help? Check out our quick help guides: 

• Can you get a mortgage with a CCJ?
• How much deposit do you need for a bad credit mortgage? 
• Can I get a mortgage with bankruptcy? 
• Payday loan mortgages.
• Bad credit commercial mortgages.

How often is a credit report updated?

CheckMyFile is only updated once the source information has been received and reviewed by a lender and therefore most updates are submitted on a monthly basis.

In addition, there can be a time delay between the different agencies updating their information which can cause discrepancies however they are likely to be resolved over a short period of time.

CheckMyFile however sources information from a range of credit reference agencies, therefore, providing a more comprehensive oversight for lenders to make an informed decision upon when reviewing an application for borrowing.

Is there a charge to access CheckMyFile?

There is a free 30-day trial available with CheckMyFile and therefore there are no charges to access a report within this time.

Ahead of a mortgage application is it advisable to undertake an audit of all accounts as well as request a free credit report to check it for errors.

Always ensure that there is plenty of time to log any queries with the credit referencing companies before an application.

Therefore, it is advisable to use the full duration of any trial to ensure that any issues with the data are being resolved and updated.

Should the subscription continue longer than the month’s free trial, the charge is £14.99 per month.

However, it is easy to cancel a CheckMyFile account anytime via the expert help area once logged into your account.

What is CheckMyFile Summary

CheckMyFile are a multi-source credit reporting service that enables customers to review all of the information feedings into their credit score.

CheckMyFile is also simple to use and therefore we recommend it.

We recommend checking your credit report regularly to ensure that the information is accurate, and so that any concerns can be rectified as soon as possible.

Should you have any concerns regarding your credit score, please feel free to contact our friendly expert team who can assist with advising any next steps as well as financial solutions available to you at the current time.

Call us today on 01925 906 210 or feel free to contact us. One of our advisors will be happy to talk through all of your options with you.

Having an individual voluntary agreement (IVA) can cause issues when looking to secure a mortgage,  however this guide will provide some insight into overcoming some of the common hurdles.

What is an individual voluntary agreement (IVA)?

An individual voluntary agreement or IVA is a process to avoid bankruptcy where a person signs a contract to make certain repayments of debt to the lenders.

People often opt for an IVA when they are facing financial troubles and cannot pay off all debts in full.

When entering into an IVA, the interest is frozen on outstanding debts and possibly the repayments are lowered to a more manageable amount.

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How does an IVA after your credit rating?

A credit score illustrates how worthy of credit an individual is at a given time.

The score is calculated by credit reference agencies by reviewing an individual’s credit history.

Lenders will use a credit score to analyse an individual during a credit application.

An applicant’s credit score will determine if an offer of credit can be made and the terms available to them such as the interest rate offered.

Someone with an IVA will have their credit score impacted. If an IVA is still active, further credit may not be offered, due to the level of risks that lenders would face.

An IVA agreement will stay on the financial records for six years following the date of the IVA agreement.

Once the agreement had concluded, a completion certificate should be issued to formally document that the IVA has been settled.

At this point, it is worth checking that the credit records have been updated correctly.

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Windfall Clauses

IVA’s often contain a windfall clause which means that if a sudden cash sum is received during the duration of the agreement, it is given to the creditors.

The clause relates to any sum of money received such as a cash prize, inheritance or pay-outs.

Therefore, if someone who is subject to an IVA manages to gather the funds for a cash deposit during the period of the IVA, creditors may challenge the source of the money.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

Improving a credit score following an IVA

As more time passes following the settlement of an IVA, a potential mortgage applicant’s credit score will improve, therefore increasing the chances of obtaining a mortgage.

After six years, an IVA will drop off a credit history, however, a credit score will be impacted due to the lack of borrowing. Lenders will therefore be nervous as recent responsible use of credit has not been documented.

Top tips to improve your credit rating:

1. Check your credit report – Request a report from a reputable credit reference agency and review the content. If there are any errors, either contact the company directly or the credit reference agency whom the report was run with to investigate.

At this point, it is also worth checking the financial associations listed and requesting the removal of any old information, such as links to ex-partners.

2. Register to vote – By registering to vote you will be added to the electoral roll, which is another record that lenders can check to confirm the identity and address of applicants.

3. Apply for credit wisely – Every credit application will leave a mark on your credit file, which other lenders can see. Therefore, the history of any denied credit applications may also be visible.

4. Keep credit usage low – When applying for new credit, lenders will review a number of elements of your credit file, not only any outstanding balances but also the value of available credit.

5. Build a good credit history – Building a positive credit file shows that you can be responsibly borrowed, make regular and appropriate payments and remained within the credit limit. If you haven’t had any credit before, lenders will be nervous as there haven’t been any records of managing credit.

There are financial products on the market aimed at those who are building a credit history or recovering their credit file, such as ‘credit builder’ credit cards.

Often the interest rates will be very high therefore they are designed for the balance to be paid off in full every month for customers to document a pattern of responsible repayments on their credit file.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

Check Today's Best Rates >

How to get a mortgage with an IVA

Settling an IVA can improve an applicant’s chances of success when applying for a mortgage.

However certain lenders will always refuse applicants that have ever had an IVA, whilst others would consider applicants.

However, there is a middle option. There are a number of lenders who will consider lending to mortgage applicants who have settled their IVA three years ago.

To be in the best position for this option, not only is the IVA settled but applicants have rebuilt their credit history by documenting responsible borrowing and repaying debts over time.

In this scenario, it would be beneficial for applicants to have a higher deposit, between 15% and 25% of the value of the property value.

This reduces risks to lenders and therefore increases chances that lenders will be prepared to issue a mortgage offer.

Any mortgage offers provided to those applicants with a bad credit history are likely to be at a higher interest rate and for a lower value, due to the risks to the lender.

Before applying for a mortgage, it would be sensible to seek the advice of an independent mortgage advisor who can investigate options and advise on the best approach, before searching the property market.

Note: If you have a debt management plan, or a default, it’s also  still possible to attain a mortgage with bad credit, but as with an IVA there are more things to consider.

Applying for a mortgage with an IVA? Contact us Today 

Our expert mortgage advisors are here to help you find a lender which you can secure a good deal from.

Deals available will be based on your financial situation and so you’ll have a much easier time finding a loan which is best for you.

Give us a call on 01925 906 210 to speak to an advisor, or contact us for mortgage advice that’s personal to you and takes your credit history into account.

That way you’ll know where you stand in the mortgage market and we can guide you on your route to securing a suitable loan.