Not necessarily.
From what you have described, it sounds as though your earlier arrangement has not caused serious damage to your credit record. If your credit reports show your payments as up to date and you have managed your credit cards well more recently, that should count in your favour.
Lenders do not usually look at one issue in isolation. They are more interested in the overall picture, including whether your finances now appear stable and well managed.
How Important Is Your Credit Record When Applying for a Mortgage?
Your credit record is an important part of the mortgage application process, but it is only one part.
Lenders will look at whether you have missed payments, defaulted on any accounts or had recent financial problems. They will also consider how you have handled credit more recently, as recent conduct often carries more weight than older issues.
So if you have been managing your credit responsibly over the past 12 to 18 months, that can help strengthen your application.
Do Lenders Only Look at Your Credit Score?
No. Your credit profile matters, but lenders also assess a wider range of factors.
This can include how long you have held your bank account, whether you are on the electoral roll, how often you have moved home in the last few years, the type and length of your employment, your income and your existing financial commitments.
That is why it can be difficult to say with certainty whether a mortgage will be approved based on credit history alone.
Does an Arrangement to Pay Always Stop You Getting a Mortgage?
Not always.
If you previously had an arrangement to pay on a credit card, lenders may look at that as part of your history, but the impact will depend on how it was recorded and what has happened since.
If your credit file does not show defaults, and you have had no missed or late payments in the last two or three years, that is clearly more positive. A clean recent track record can go a long way towards reassuring lenders that you are now managing your finances well.
What Else Can Improve Your Chances of Mortgage Approval?
There are a few things that can help improve your position when applying for a mortgage.
Keeping credit card balances low, making payments on time, staying on the electoral roll and avoiding unnecessary credit applications can all support your profile. It is also important to check your credit reports regularly to make sure the information recorded is accurate.
Alongside this, lenders will also look at affordability, so proof of income, stable employment and sensible overall financial management will all help.
Speak to John Charcol About Your Mortgage Options
Previous payment issues do not always prevent you from getting a mortgage, especially if your recent credit behaviour has been strong and your wider financial position is stable.
At John Charcol, our independent mortgage advisers can look at your circumstances, explain how lenders may view your credit history and help you find the right mortgage for your situation.
Please call 023 8235 2300 to speak to one of our advisers.
