Mortgages and credit rating

Darren0410

So before I begin, done need comments about PST history and stupidity. Don’t need comments about where I went wrong etc well aware of past mistakes. So I have a terrible credit rating, current 116 on ClearScore not sure what Experian rate as. I have several loan from a previous relationship 1 with everyday and 1 with amigos, these are both paid on time every time(just stupid rates of interest so never seem to go down) I had a provident loan for a family member that they had stopped paying causing arrears. I have a few (3) historic ccjs from many years ago. I have a car in finance that I have just got 6 months ago, all up to date and paid on time. I’m a lot better with finances now than I was as a young lad but as we know credit ratings take a lot of time to turn around.

My question is, can you still get a mortgage in this type of situation? I was only thinking of a cheap starter property of around 50k or is it a case of not being touched with a barge pole? Are there companies out there that specialise in poor credit ratings? I’m well aware that if there is you are looking at very high interest rates etc but surely getting on the property ladder is better than chucking £500 a month rent away every month. Obviously I’m more grown up now (30) and paying more attention to credit scores and paying debts unlike when I was 18/19/20 etc so not like I’m going to default or miss payments. But not sure if it’s even possible to get a house yet.

[Deleted User]

Your credit rating is irrelevant when it comes to apply for credit. Always ignore the scores.

Lenders will be looking at your account history and debts. As the negatives get older and you reduce your debt, you'll be in a better position.

If you have a poor history, consider using a broker.

sal_III

Definitely use broker with such checkered history. All the at matter is the credit record and how old the entries are, ignore the made up credit score number.

In any case you will need a sizable deposit, which brings the question why not clear your high interests debt, before saving.

Getting a car on finance 6 months before you start looking at mortgages probably wasn't the smartest decision.

foxy-stoat

What is your total;
Gross annual salary
Unsecrued debt
Secured debt
Cash deposit
And what part of the country are you planning on buying into?

ACG

We do a lot of bad credit mortgages.
Yours is relatively tame compared to a lot we see.

The issue you may find is if you cant get high street rates (difficult to say, but there is potential) you may find £50k is below the minimum of most of the specialist lenders (typically £75-85k).

Get your credit reports infront of an experienced broker.

Darren0410

Thanks for the replies guys. Useless at all this... they really should teach about it in schools. So getting a car finance would be seen as a bad thing? I mean there is no rush I’m just testing the waters as I believe chucking £500 a month at rent is a waste. Last 5 years I lived with ex partner who had a mortgages property and I just contributed financially to that.

So looking at something cheap like 50/60k wouldn’t be seen as a plus to a lender. I thought ccjs would automatically mean a no to be fair.

So annual earnings of £19.5k unless overtime is done so I’ll not count that.

Unsecured debt: every day £1999 (half of £275 monthly, ex pays other half) Amigo £2497 (£199 monthly. This should both be done with by mid next year so maybe worth waiting at least until then.

Secured debt: I’m guessing the car is a secured as it is against the car £9126 (£158 monthly)

Would have been looking at around 10% deposit wise but that would be with help from parent, they would be happy to help with a deposit as there is something there to show for it if you get what I mean. Also I’m in the north west, Lancashire more specifically.

My past credit history is dreadful, I was young and stupid. But more recently (4/5 years) its been much better but that good old credit score doesn’t seem to improve. There will have been a few rocky patches in the 4/5 years due to being off work for a short period in that time but that was 2 years ago and everything was always paid and is currently up to date.

[Deleted User]

Find out how quickly you can get shot of the car. You'll be stuck with for a while yet probably, but don't drag it out longer than needed.

You've around 14k of debt on a 19k gross income. That's not a great ratio.

ACG

I think the adverse is the easiest part of this to overcome.

Being liable for nearly £500 a month before you even start is probably too much on your income.

Added to that your deposit is gifted and you have adverse.

The 3 combined with a relatively small deposit (percentage wise) is going to limit your options and I do not think you are going to pass credit checks on the high street. That leaves you to specialist lenders, their rates will be higher and they will be assessing rates on around 6-8%, which on £20k with £500 a month before you start is probably not going to pass... Especially when the minimum purchase price is going to be around £75,000.

You need to get those commitments down or paid off really to have any chance of this going through.

Darren0410

Thanks, I’ll take that on board, think it’s early next year when both loans come to an end so I’ll wait for them to drop off. Hopefully the credit should improve by then as well.

Good to know how it all actually works. I was all hung up on the credit score aspect of it all.

ACG

Credit score is worthless.

You may be able to get something before those loans are cleared, maybe 3-6 months before they are due to finish. Lenders will be able to see they will be paid off soon so some will ignore them where there is less than 3-6 months to go.