Credit Scoring (Rating) - Effect of financial history
UK lenders will always carry out a credit check before they agree to grant any future finance. Credit scoring is a process by which a consumers past credit history, including borrowing and repayment, is considered using a points system to determine suitability for additional credit being lent. Many factors and criteria are taken into account on the credit check. These include the length at the current address, security, employment, income, marital status, age and credit rating. The credit check will reveal if there is an adverse rating based on debt repayment history, therefore arrears, late or defaulted payments, missed payments and County Court Judgments (CCJ's), and will all result in a lower credit rating. The lower your credit rating the greater the risk a lender will consider you to be to them. If you have defaulted on repayments before you may do the same again. This check therefore reveals the consumers credit score (rating) and lenders use this to asses the risk of the customer defaulting on the finance.
Credit Rating Example -
UK Adverse Credit Mortgages
A Mortgage is usually a very large loaned finance repaid over a long term and used exclusively to purchase property. The mortgage is usually secured upon the very property it is being used to buy. Adverse credit mortgages are a product tailored specifically for consumers who have a bad credit, adverse or poor credit rating. A poor credit rating could be the result of CCJs, late payments, defaults, being self employed, arrears or even bankruptcy in the past.
Having adverse credit does not have to mean you will be unable to get a mortgage. There may be restrictions on the size of the UK adverse credit mortgage, and the mortgage repayments could be larger due to the greater risk to the lender. If you have defaulted on payments in the past and have a poor credit score, a lender has no reassurance that you will not do it again. With patience it is possible to find a UK lender willing to grant a mortgage to a customer with an adverse, poor or bad credit rating. There are UK mortgage providers, many are online, that specialise in lending to people in this situation.
Credit Score Information.
A credit check revealing a consumers low credit score means a lender will consider it risky to lend you further finance. This means you may have to pay higher interest rates should the lender decide to grant you the finance. Some UK lenders may consider a rating too low, or a customers credit history too chequered and refuse any UK finance application, but it is possible to find UK lenders, perhaps online, who will grant personal finance even with adverse or poor credit scores. There are many lenders who specialise in adverse loans for people with credit problems. If you keep up payments on any loan this will then help to improve your credit score, making it easier for you to get finance in the future. Contact your lender straight away if you are experiencing difficulties in paying monthly payments.