The Broker: I’ve had bad credit card debts in the past – does that mean I can never buy a house?

Posted on 12 September 2016 by Richard

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Whilst previous ‘bad’ credit card debts won’t exactly present you in the best light to a lender, it doesn’t necessarily mean that you won’t ever be able to buy a house. As a lender looking at you as a potential borrower, the one major burning question they would have is… “Will you pay my mortgage?”  And the history of how you’ve maintained your other credit accounts in the past can be a useful guide as to what kind of borrower you’ll be going forward.

There are a quite a few lenders in the market who are totally reliant on their credit scoring, hence why we ended up with the “the computer says no!” catchphrase.

However, not every lender takes such a rigid stance, and for those lenders that will consider this type of case, a lot depends on how historic the credit problems are, & also whether they’re now back up to date. We also need to know what caused them in the first place, as in many cases it’s a life event such as divorce, redundancy, illness, that’s likely to be at the root of the problems. If there are genuine extenuating circumstances, then it will aid your cause. “I’m just not very good with money”, isn’t going to endear you to a lender.

Depending on exactly how bad the credit card debt was / is, we may have to go to a “credit repair” lender, where the rates will be more reflective of the risk the lender is taking. These are very much specialist lenders and not likely to be names you’ve readily heard of, but they are a valuable addition to a brokers armoury. It’s worth pointing out that this is about “credit repair” rather than maintaining the status quo. “Credit Repair” lenders are about helping borrowers get out of the problems they’re in and back into mainstream mortgage lending sooner rather than later.

If you think you have a problem, then you should definitely get a copy of your credit file & see exactly what the damage may be. We can talk this through with you and explain what the implications are likely to be. If they’re settled & reasonably historic, then this will also be a plus point in your favour.

Another factor to consider is how much deposit you have to put down. The general rule of thumb here, is the bigger the deposit, the more discretion a lender may have in making a decision. Some of the smaller regional building societies, have a lot more underwriting flexibility than the larger high street lenders, particularly where there are some extenuating circumstances around the past problems. 

If you’ve had some poor credit issues in the past, then the most important thing to do is to get your credit file and speak to a mortgage broker, who can help explain to you exactly what your options and chances of buying a home are likely to be.

For more information on please call us on: 0344 346 3672

Categories: Budget, Mortgages, First time buyers

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