Mortgage with bad credit?

[Booooot]

I unfortunately have a bad credit score, not a huge amount of debt and I make all my payments on time. My husband has an excellent credit score and we have a deposit of 60% so fairly large. We’ve applied to borrow £140k. We should here today if we are going to get a mortgage in principle but was just wondering if anyone else has been in this position and if its all worked out? Im a worrier.

You'll probably be fine - you might not get the BEST rate available and might need to look at specialist, rather than high street, lenders but based off this I'm fairly confident you'll get one.

How big is the debt and where does the bad credit come from? The longer all your payments have been made on time the better - i.e. if you missed one 6 months ago or it's a debt repayment plan, that's trickier, but if you last missed a payment 2 years ago and your debt isn't huge (therefore dramatically affecting your affordability) it shouldn't be an issue.

I'm in the same situation but with a DMP and not much deposit (but only wanting to borrow about 50k-right to buy) never missed a dmp payment though. Would this be an issue?

My debt is about 3.5-4k

My debt is 3k. I was a struggling student single mum for a few years which is where my credit took a hit. Then with Covid, my husband lost his job so we ended up back in the credit cards again. His score is excellent though as he’s much better with money than I am! Our broker said that NatWest will disregard our debt as we are using a property sale to clear it but in just worried about my actual credit score mucking things up for us.

Your actual credit score number isn't relevant when it comes to applying for a mortgage. Banks have their own credit scoring system. I work in mortgages and thing that cause issues are CCJs, defaults, high credit utilisation, missed payments, high levels of debt in relation to income, payday loans etc. We generally look at a 3 year history

@Jmaho out of interest, what counts as high credit utilisation, we spend a large % of our income on credit cards every month but repay it each month. Would this flag up as an issue? Thanks

@flowerseeds credit utilisation it to do with how much credit is available to you and how much you have in terms of balances
So things like this would flag up in a situation where someone was close to credit limits on overdrafts, credit cards etc basically utilising a large percentage of the credit that is available to them
In your case it wouldn't be an issue if the card is cleared every month as you can see the payment amounts and can see that the statement balance is cleared every month.
We do the same we spend a huge amount on our Tesco credit card each month as we pay for everything on it but then clear it in full and we get lots of points for it

Mortgage providers will put less emphasis on credit score than many other lenders, including those offering store cards or car loans. The reason being that the mortgage is secured on the property whilst the other forms of loans are unsecured.

The mortgage provider will be more interested in ability to pay (earnings) and loan to value, of which yours is decent.

As others have said, credit score is meaningless. What lenders do do is run through your history with e.g. Experian looking for debt management plans, missed payments etc.

Some people get a mortgage with a car each on HP, it's not just "You owe money so can't have any more." Trust your broker!

This is incorrect. I'm a broker- some banks do use credit scoring and its a 6 year history. Everything on your credit file in the past 6 years

That being said OP, with that loan to value and small debt, you'll probably be ok. If you have default and CCJs you can still get a mortgage (I found this out after after qualifying and realised I could get a mortgage so got one with my not too shiny credit).

Hard to say for sure without knowing your full circumstances, but it's normally OK. There's specialist lenders who work with 'bad' credit. Providing you're not bankrupt or in an IVA and nit peppered with defaults, CCJs and missed payments, its normally fine .* *

Each lender is different. Some its 75%, some its 50% others go off your debt to income ratio. So if you have £50k debt and earn £40k, that could be an immediate no for some.

They'll ask if you clear the balances each month so even if you're 1 day before payday and they run a credit report it'll show your card maxed out but you just tell them it'll be paid off :)

All this being said, every lender is vastly different in what they will and won't accept. Trust your broker :) its what they're there for

Sorry reply was for @flowerseeds

I took mortgage on in my name only as husbands credit was bad.

@Deezeboob I said that the actual number isn't used as in the number that a company like Equifax gives you. I also said credit scoring is still used by some banks
I also said GENERALLY a 3 year history is looked at as in the bank that I work for who are a very strict lender base lending on your 3 year history. We wouldn't decline an application for a missed payment that occurred over 3 years ago even though we can see a full 6byear history as that's how long things stay on your file
I know a lot if people love a chance to say someone is wrong but nothing I have said is incorrect

You said - you're credit score number isn't relevant.

It is to some lenders. Fair enough where you work it might not be but you can't making a sweeping statement like that. I guess you work for a specialist lender who may disregard anything past 3 years but all I'm trying to say is not all the lenders are the same which is the advice i want to give OP and anyone else whos curiois. I'm justing trying to be helpful and give a broader insight. Sorry if I undermined you that isn't what I intended :)

*who's curious

Still haven’t heard anything. Stressed!!

@Booooot have you asked the broker for an update? When did you speak to them? It can take a while sometimes - it's a lot of information to cross reference against 100+ lenders policies! Hang in there. What I'd say is its sometimes a sign you have a good broker if it takes a while and your credit history isn't 100% perfect- usually means they're working hard on trying to find you the best product :) (on the flipside, they could be snowed under). I'd exhaust all options for my clients even if it takes a week. A good broker will give you suggestions too - like a PP said, would you be willing to do it in one name only if it meant getting a better rate?

@Deezeboob I don't work for a specialist lender at all. I work for a very mainstream bank that is stricter on credit conduct criteria than any of the big high street lenders. I have been in Underwriting for years but currently working in credit and risk and we often review other banks criteria to make sure we are in line with them. I don't know any if the big name lenders that would be concerned about missed payments over 3 years ago

We had horrible credit. No CCJs etc just defaults but it was horrible. Never dreamed we would get a mortgage but we did on our dream house a year and a half ago. Our interest rate is a bit rubbish but we take that as punishment for being stupid with debt and just grateful we have our own house now.

I called them about half an hour ago and they said he was on another call so hopefully just really busy. He had us pencilled in for 2pm and to be fair I dont know how long these things are supposed to take ha!

I have awful credit and used a specialist broker. Got a mortgage

Underwriting for a bank for a year? Just one?

Sorry I misread.

Can i ask, are you a mortgage broker?

@Deezeboob I used to be an advisor but got into Underwriting in 2002. Worked for current bank since 2014. Now working in credit and risk for same bank