| When you apply for a mortgage your credit rating will | | | | If you do have a blemished credit record it is best to |
| be checked. The lender uses you credit rating to see | | | | look for lenders who provide bad credit mortgages. |
| how reliable you have been previously in paying off | | | | There are a number of providers who specialise in |
| your debts. From the point of view of the lender, they | | | | these mortgages, and they should be able to help. |
| would like to know what risk might be attached to | | | | There is little doubt, however, that you will have to pay |
| giving you a loan. | | | | a higher interest rate for a bad credit mortgage - to |
| The mortgage lender will probably use one of the top | | | | cater for the increased risk. These type of mortgages |
| two credit references agencies, Experian or Equifax, | | | | are sometime called adverse credit mortgages, and |
| which hold a range of information about you and have | | | | the whole sector is often referred to as sub-prime. |
| a formula to assess how good - or bad - a credit risk | | | | Although more well known high street brands have got |
| you are. | | | | involved in bad credit mortgages in recent years, the |
| Any problems you've had with paying off debts will be | | | | problems of the sub-prime sector in the United States, |
| recorded. You are also assessed by address - and | | | | and the credit squeeze that followed has caused all |
| indeed, if anyone has lived at your address before with | | | | banks to review their lending criteria. The crisis at |
| a bad credit record, that will count against you too. | | | | Northern Rock was a direct result of the credit |
| If you have a black mark against your credit history | | | | squeeze as banks refused to lend money to each |
| there is not much chance of it being disregarded by | | | | other, and much of Northern Rock's business model |
| the lender. However, if there is an error on your credit | | | | was based on borrowing money to lend to borrowers |
| record, there is a possibility of getting rid of that. You | | | | for house purchases. Now, banks are much more |
| can get details of your credit file for £2. If you | | | | wary about who they lend to, and the adverse credit |
| feel the information on your file is incorrect, or you | | | | sector has taken a beating. |
| would like to add a note of explanation, Experian and | | | | Even making an enquiry about a mortgage can count |
| Equifax will add an agreed statement to your file. | | | | as a "cross" on your credit record as they may carry |
| Every time you have a credit application turned down, | | | | out a credit check as part of your enquiry. Once on |
| it will be recorded on your credit file, so it's important | | | | your credit record, all other lenders can see the check |
| not to apply to a host of providers. | | | | has been made and will treat it with suspicion. |