How to solve your credit problems

Why do I have bad credit?

• If you have struggled to meet any mortgage or rent payments for whatever reason.

• A County Court Judgment (CCJ) will lead to a mortgage application being rejected, and some people don’t even know they have a CCJ on their record.

• Surprisingly, if you have never had a credit card, it might stop you getting a mortgage. If lenders have no evidence that you can meet regular repayments then they can be cautious about loaning you a mortgage.

• One of the most common reasons for a bad credit rating is simply over-applying. If you make several applications this negatively impacts your credit record because it could look like over-commitment on your part, or even fraud.

• The biggest, and most obvious problem is bankruptcy and you will have many financial restrictions with regards to trading and obtaining credit. Even after you have been discharged, a record of this remains on your record for six years.

What can I do about it?

• First of all, get hold of your credit rating before you start applying for a mortgage. This will help prevent refusals and will allow you to identify any mistakes or problems on your record.

• There are two main credit-referencing agencies used by lenders, Experian www.experian.co.uk and Equifax www.myequifax.co.uk

• The leaflet ‘no credit’ from the Office of Information Commissioner is designed to help update the information held by credit reference agencies. www.informationcommissioner.gov.uk

• Ensure that you are on the electoral roll, as this is used as proof of residence and the longer you have lived there the better your credit rating will be. This is updated every October.

What are my options?

• Your first step should be to find an independent broker that can identify the credit problems and point you in the right direction for a mortgage.

• Non-conforming mortgages were developed for people with quite serious debt problems and they tend to have higher interest rates, higher charges and stricter conditions.

• There may be the option for a self-cert mortgage, where you declare your income but don’t have to provide proof.