“You must have good credit to get the best mortgage deal. However, it is possible to have it approved even if your credit score is not stellar because your high income can offset against credit history.”

Your application must be as attractive as possible if you want the lender to sign off on it without further ado. A lender does not approve your request as long as you do not show your repayment capacity.  

Undoubtedly, the lender looks over your credit report to see the status of your previous debts, number of defaults, the length of your debt, and credit checks. You might have a bad credit score for a number of reasons such as you have little or no credit history or your report has errors. Whatever the reason, you might be declined due to the high default risk.

Well, it does not mean you do not have a hope in hell of getting the mortgage. Below are some tips that will help you boost your mortgage approval rate.

Examine Your Credit Score

Do not be under the impression that you will have a good credit score as you have been paying out all of your debts and utility expenses on time. Even though you have never had any issue like late payment fees, you are likely to have a poor score because your report may have a lot of mistakes.

You should review your credit report from each of the credit bureaus. Before you apply for a mortgage, you should go through it at least once to ensure that it does not consist of any default that you did not make.

Do Not Close Inactive Credit Card Accounts

As notification of closing your credit card account pops up on your email, do not be worried because the lender has the right to transfer that limit to another borrower.

Cancellation of your credit card will increase your credit utilization rate that must not be beyond 30% of your credit card limit. The rate goes up because the canceled limit is no longer considered on credit utilization.

For instance, if your credit card account is in arrears by £2000 and the total limit on all of your credit cards is £5000. The credit utilization rate is 40%. Suppose, you have an inactive credit card with £1000 limit that your lender closes, the utilization rate will hike up by 10%, which means it will go up from 40% to 50%.

Do Not Apply For Credit Shortly Before A Mortgage

The last debt you took out before your mortgage application must be at least three-months-old; some lenders follow strict benchmarks and require them to be at least six-months-old, otherwise, they will turn down your application.

Multiple applications in a short period mean multiple searches that each lender will make on your report each time. The registered searches will pull your score down and as a result, you will be declined.

Save A Bigger Deposit

Apart from your credit score and income, the lender will also look at the amount of deposit (the proportion of your new property’s value that you will arrange). Each lender has a different policy, but you are supposed to have at least 5% of your mortgage. The rest amount is considered Loan-to-Value (the proportion of new property’s value that you will borrow).

The larger the deposit, the better it is. This will increase the chances of approval even if your credit history is bad. It mitigates the risk of the lender and hence, you will get the mortgage at affordable interest rates.

Prove Your Job Is Secured

Self-employed and part-time workers struggle to get a mortgage approved because the lender has no certainty about your cash inflows. However, stable full-time employment can help you get the loan approved far quickly. It will work to your advantage if you have been very old in the same employment. It gives a big picture to the lender about your increments and stability. Let your lender know if you have fixed income sources apart from your job such as rental income. The stronger the financial condition, the easier you will get the mortgage.

Apply For A Joint Mortgage

A joint mortgage may involve your spouse, friend or a business partner. Joint mortgage applications are approved after considering the income of all applicants. The chances of approval increase if the credit score of other co-signers is higher than yours. However, you will be equally responsible to pay off the mortgage. You can take out a mortgage even if your credit score is poor but you might not be able to get the best deal. Focus on building credit and put aside money as much as you can so that you have a large deposit.

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