Get a Quote

Bad Credit

Frequently Asked Questions

I have had problems with getting credit in the past will this stop me from getting a mortgage?

No. As long as any County Court Judgements (CCJs) you have registered against you are satisfied, registered more than 3 years ago or below £250 we should still be able to get you a 100% mortgage.

What is a county court judgement?

County Court Judgments (CCJ's) are a ruling made in the county court against a person or company for debt that has not satisfied payments to creditors. Generally if a CCJ is paid in full within 30 days of the date of the judgment it won't appear in the credit register. CCJ's are a matter of public record. They are recorded and held for 6 years with the Registry Trust. If a judgment is settled after the 30 day period it will be entered into public record and it will show on any credit searches done against you by lenders, however it will show as that it has been satisfied.

What is a credit report?

A credit report contains information about your credit history. Credit reports are compiled by a credit reference agency such as Equifax or Experian. Lenders, employers, landlords etc are able to purchase this information in order to help them to decide whether to offer you a job, a rental property or credit such as a loan, a credit card or a mortgage.

The following information is included within a credit report :

  • Personal information such as your name, address and date of birth plus additional information such as your current employer and previous employer.
  • Credit information including the date credit accounts were opened, the credit limit, the loan amount, the outstanding balance and the payment history (including any late or missed papyments). Closed or old accounts will also appear for up to 6 years from the date they were last used.
  • Enquiries made by anyone wishing to look at your credit file. These stay on your file for up to two years. The types of institutions looking at your file will depend on what credit you have applied for e.g. credit card issuers, insurers, banks or mortgage lenders, loan companies etc. In addition, your landlord or employer may ask to look at your credit file.
  • Public information such as County Court Judgements and bankruptcies may appear on your credit file and will stay there for 6 years.

A credit report does not give details of any savings and bank accounts you hold neither does it give any information about your gender, ethnicity, religion, health details or criminal record.

How do lenders find out about my poor credit history?

When lenders begin to look at your application they will carry out a credit search against you. This can be done via a number of companies such as Experian, Equifax or Call Credit and it will provide them with information on your credit history such as your payment record, any credit that you have defaulted on or any CCJ's that are registered against you. It will also show your address history and anybody else living at your address who may have had problems with credit in the past. Every application you have made for credit will show up irrespective if you actually took out the loan, mortgage or credit card - even if the loan or credit card has a 0% rate of interest. In addition, the payment history of all loans, credit cards etc. will be shown and this will include details of any missed or late payments.

If you are worried about your credit history, it is possible to obtain a copy of your credit file by contacting Equifax or Experian.

I have been turned down for a mortgage but the lender won't disclose why - how can I find out?

Every lender has different criteria of what they will and won't accept. Lenders should always tell you why you have been declined. However, if it is due to the results of a credit search they are not able to tell you what they have found. If you do not have any bad or adverse credit on your credit history it could be that you have been declined due to your credit score.

What is a credit score?

Credit scoring is a system used by lenders to give them an idea of how much risk they would be taking on by lending you money. The system works by you accumulating a number of 'points' based on your lifestyle. Every lender has criteria for what is an acceptable credit score. Your score is determined by a computer system so there is no way of calculating what it is before an application is sent to a lender and as you may expect you could have a high credit score with one company and a low credit score with another. There are however some lenders that do not use credit scores.

Many factors will affect your credit score and these can include:

  • The amount you owe - for example if you are near to your credit limit your credit score may be affected.
  • Your payment history - if you have a history of late payments on other credit this will adversely affect your credit score.
  • Length of credit history - the longer the record then the more information the lender has in order to assess you. An individual who has had not credit in the past may receive a low credit score simply because the lender has no information upon which to base their decision.
  • Number of searches - each time someone searches your account, this appears on your credit file and a large number of recent searches may lower your score.
  • Number of new accounts - if you have recently applied for a number of new accounts (e.g. loans and credit cards) this may lower your score. If you are applying for a mortgage take care not to apply to too many lenders as they will each perform a credit search. If you have been turned down for a mortgage then it is advisable to speak to an Independent Mortgage Advisor who will be able to assess your situation and recommend an appropriate lender.

Will I always be penalised for credit problems I have had in the past?

Adverse information will stay on your credit file for anything between 1-6 years. Some lenders will not accept applications from anyone who has had any bad credit in the past, however lenders are now becoming more flexible about previous credit problems and many high street lenders will now accept applications from people with previous credit problems.

There are ways to improve your credit file and credit score such as:-

  • Make sure that you make your repayments on time
  • Ensure that you are registered on the electoral role
  • If you have a poor credit history open then you could set up some new accounts and manage them responsibly to show that you can manage your debt.
  • If you have very little credit history then opening some new accounts and managing them carefully could help your credit score.
  • Regularly review your credit file to ensure that you are aware of what information is being held.

I have missed some payments recently on my credit card, will this affect my ability to get a mortgage?

It may stop you getting a mortgage with some high street lenders, however there are also lenders who do not take into account conduct on unsecured loans or credit cards.

What exactly are mortgage arrears? If I have them will I still be able to get a mortgage?

A mortgage arrear is a term meaning that you haven't made your mortgage payment for a period of time. Some high street companies will allow you to have a mortgage with them as long as you have not had any arrears in the past 36 months. It is possible to find you a mortgage even if you have missed mortgage payments in the past 12 months, however it could affect the amount that you can borrow and we may need you to have made your past 3 to 6months payments on time. Some lenders will not class your payment as missed if it received within 30 days of its normal due date.

I am going through a divorce and can't afford my mortgage payments, what should I do?

If you are having problems paying your mortgage, it is important that you contact all of your lenders. You may have more than one lender because of a second mortgage (also known as a secured / homeowner loan second charge). They will be able to go through your circumstances and try to come up with a way to help you.

You may find it helpful to seek advice from another organisation such as your local Citizens Advice Bureau or an Independent Financial Adviser. You can also refer to the Financial Services Authority (FSA) information leaflet "What to do when you can't meet your mortgage payments", if your account is regulated by the FSA.

What is debt consolidation?

Debt consolidation is the term used for when you add borrowing on unsecured loans or credit cards together onto a new secured or unsecured loan or your mortgage.

I have credit card debts and loans that I am struggling to pay - I am a homeowner with a mortgage what are my options?

There are a number of options open to you these include an unsecured loan, secured / homeowner loan (like an unsecured loan but the borrowing is secured on your home by a mortgage) or re-mortgaging. A secured loan or re-mortgage will allow you to repay your debt over a longer term and should reduce your monthly payments, However you should remember that the loan will be secured against your home, you may end up paying back more by taking the debt over a longer term and that your home may be repossessed if you do not keep up payments on a mortgage or loan secured on it.

I have been offered a secured loan but the interest rates are high, are there any alternatives?

If you have enough equity, you may be able to re-mortgage your home. Interest rates for 'first charge' mortgages are nearly always lower than 'second charge' mortgages. It may also be worth looking at an unsecured loan. Contact Endsleigh Financial and we will be able to go through your options and advise you on the best way to go forward.

What is a sub-prime lender?

A sub-prime or non-conforming lender is a company who accept business not widely accepted by high street lenders. This could be for a number of reasons such as self-certification or source of income, credit history or the construction of your home.

I have had poor credit in the past due to a redundancy. I am now working and paying my bills on time, will I always be penalised for the past when I apply for a mortgage or loan?

No. Adverse credit such as defaults and CCJs (County Court Judgements) usually stay on your credit history for around 6 years. If you are able to explain why you had credit problems or you satisfied them quickly there may well be a lender that is willing to offer you a mortgage while they are showing on your credit history.

When would a secured loan be appropriate for me?

Secured loans can be more appropriate than a re-mortgage in a number of situations such as high redemption penalties on your mortgage, you may have a really good rate on the main part of your mortgage but have had credit problems since you took it out or you may want to borrow extra money over a shorter period than your mortgage. Contact Endsleigh Financial and we will be able to go through your options and recommend the best way for you to go forward.

How does a secured loan work?

A secured loan is basically the same as a mortgage. The only difference is that a secured loan will take second charge on your home where the lender has first charge. This means if your home is repossessed the lender who has first charge over the property gets to deduct anything owing to them before any surplus is passed on to the second charge.

Why is it best to use an independent mortgage adviser for my poor credit mortgage?

It is best to use an Independent Mortgage Adviser to ensure you get the best deal available from the whole market. Many companies are tied to panels which could only include 3 or 4 lenders and others are tied to one company. At Endsleigh Financial we have access to the whole market and our advisers are not paid commission to ensure you get totally impartial advice.

Why do mortgages for clients with poor credit cost more?

In simple terms the rate you pay is dependant on your risk. This unfortunately means that if you have had credit problems in the past through non-payment of debt you will be charged a slightly higher interest rate as the lender will feel that they have a greater risk of you not paying your mortgage.

What is a credit repair mortgage?

Credit repair mortgage are deals where the interest rate you pay will improve over a set time as you maintain your mortgage payments. Lenders think that the further you move away from your credit problems the less likely you are to stop paying your mortgage and as they feel they are taking less risk in lending you money, they can offer you a slightly better rate.

Can I get a mortgage if I have been bankrupt?

You will not able to get a mortgage while you are bankrupt, however from the day of discharge there are lenders who will be willing to lend to you.

What is my credit file and how do I get a copy?

Your credit file is a record of how you have conducted credit in the past. It also provides lenders with 'Public Information' such as any County Court Judgements (CCJs) against you are where you are registered on the electoral roll.

If I have a secured loan, is it possible for me to remortgage?

Yes. There are two options that you can look at. Option One is to combine your secured loan and mortgage into one new mortgage. Option Two is to re-mortgage your property and ask for the secured loan to be postponed. Usually the first option is the best as it can be difficult to get your new mortgage lender to accept the secured loan or the secured loan lender may not like who you will have your mortgage with. By combining them both it also means that you will only have one monthly payment which will help you with budgeting.

I have a second charge on my property, what does this mean?

A second charge is simply a charge held over your house by someone other then your mortgage lender. Usually a second charge is used for a secured loan, however it could also be for a number of other reasons where another company or person has an interest in your property.

My outgoings - mortgage, credit cards, bills and loans are more than my income - why would remortgaging be a good idea for me?

Re-mortgaging will enable you to combine all of your monthly payments into one. You may also be able to spread your debt over a longer term which should then reduce your monthly payments and the interest rates you will be paying on the money you have borrowed.

My partner has poor credit but mine is good - should I complete the mortgage in my name only?

It completely depends on the situation as you may be able to get a better rate if your partner is not on the mortgage. However, you may not be able to borrow the amount you require. You also need to remember that your partner will not be on the property deeds which could cause problems in the event of separation or a death. Contact Endsleigh Financial and we will be able to discuss your options further with you.

When do lenders repossess a property?

Repossession is only used by lenders as a last resort as it is a very drawn out and expensive process. Lenders will always try to find a solution for your problems rather than repossess your home.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Endsleigh Financial Independent Tailoring is a trading name of Endsleigh Independent Financial Services Limited which is authorised and regulated by the Financial Services Authority. This can be checked on the FSA Register by visiting its web site at www.fsa.gov.uk/register.
Endsleigh Independent Financial Services Limited. Company No: 4132605 registered in England at Shurdington Road, Cheltenham Spa, Gloucestershire GL51 4UE.