A bad credit mortgage broker can help you get mortgage approval. However, you must work towards it. This is the only way you can convince a broker to offer you approval on your application. Here’s what you can do to improve your chances of approval:
Tips to Get Approved for a Bad Credit Mortgage
1. Less Outgoings
It is true that a bad credit mortgage broker may disregard your bad credit score. However, they’ll still assess proof you can afford repayments on the mortgage every month. You will be asked to produce your recent bank statements as proof. Hence, you must reduce the gap between your income and regular outgoings. The idea is to keep outgoings as low as possible. Pay off most of your debts and cancel unnecessary direct debits.
2. Go for Joint Applications
Applying for a mortgage jointly with someone else may be a good idea. However, here, your credit scores are actually considered as a whole. So if your co-applicant has a good credit score, this may work well for you. However, you must beware of one with bad credit. This might affect your credit score negatively. The lender will also consider your income and affordability collectively. Hence, if you wish to go for a larger mortgage, this will help you get approved for a larger mortgage.
Note: You must agree to sell the property. Additionally, you both will be responsible for the whole mortgage (despite one of you stop paying). In short, collaborating with someone you can trust.
3. Avoid Errors on Credit Report
You should make sure your credit score is error-free. Check carefully that all details on the score are accurately such as your address, name, etc. are accurate. This simple and quick task will help you a lot in boosting the chances of mortgage application approval.
4. Boost Credit Score
The process will take a certain number of steps. Once you follow these, the credit score improves. The best part is that it boosts your chances of being approved for a mortgage.
5. Establish Credit History
Did you know your credit score improves each time you make repayment on bills or debt on time? So start paying utility and telecoms bills through direct debit. Also make sure there’s always ample money in your bank to pay up these bills.
6. Credit-Builder Card
These products are specifically designed for applicants with bad credit. They help repair their score. Approvals are easier. The only problem is higher interest rates. Additionally, credit limits are smaller. Yet, making small payments on this card and recompensing the balance off in full will help you to build your credit score for free!
7. No Late Payments
Strictly avoid late repayments. You should also stop overdrawing your account. Start by fixing a monthly household budget to ensure no bills are paid late. Do not go overdrawn in any of your financial accounts. This tends to devastate your credit score.
8. Evaluate your “Financial Links”
Have you ever applied jointly for a financial product with someone? Remember that their credit score will be linked with yours. The mortgage lender will see that credit score as yours. So if you get “financially linked” with those with worse credit may be denied approval for a mortgage. Make sure you work to close these joint accounts as soon as possible.
9. Accurate Credit Report
Make double sure your credit report is accurate. You must check it for errors and revise them prior to applying for a mortgage. The process is easy. All you need to do is get in touch with any of the major UK credit reference agencies.
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