Buying a home is not an easy process, and doing so as a first-time buyer is even more complicated than if you were already on the property ladder. First of all, you’ll need to acquire a deposit, which, for many people, can be very difficult to save up for. However, on top of saving up for a deposit, you’ll also need to be accepted for a mortgage. This can be fairly complex, and potential borrowers are regularly met with disappointment as banks can easily refuse to lend based on a few factors. In particular, one of the main reasons that someone might be refused a mortgage would be due to having a bad credit score.

What Is A Credit Score?

First of all, a credit score is a number that essentially represents your trustworthiness when dealing with loans. It is influenced by the number of loans you have or have had andyour ability to pay them off on time. If you have missed payments regularly, you might find that your credit score will have dropped below the average and will be seen as a badcredit score. Alternatively, you might have avoided taking out any loans at all during your lifetime, thinking that this is the more responsible position to take. However, you might be disappointed by the facts here. Having no loans, whether it’s a credit card, a phone contract, or anything you need to pay off monthly, will demonstrate that you’re somewhat of a wildcard for lenders. Having no credit history can be a red flag for lenders, and they may refuse you a loan based on you havingno evidence that you are trustworthy when it comes to paying off a loan.

How Do You Find Out Your Credit Score?

There are a number of credit score checking sites available to the public, and most of these are free, at least for the basic display of your score. Some will provide you with a full breakdown of your score via a premium service, yet this isn’t entirely necessary unless you’re interested in finding out what might be dragging your score down. Using sites like Experian or Equifax is a good way to check your score, and you can also find out your score via certain banks too. Speak to your bank if you’re struggling to check this or if you would like some extra advice or information regarding credit scores.

Can You Buy A Home With Bad Credit?

The short answer to this is: yes. You can buy a home with a bad or average credit score, but it’s likely going to be slightly more difficult. When a lender checks someone to see if they are trustworthy and safe to lend to, the first thing they will check is your credit. Luckily, some lenders out there are perfectly happy to lend to people who are struggling with their credit. You can find some of these lenders via brokers such as Money Nest, who will source the right lenders for you. Many of these lenders will take into account your individual financial situation after having an in-depth conversation with you. After all, not everyone with bad credit is bad with money. Sometimes, our credit can be impacted by things out of our control.

Why Does Bad Credit Make It Harder To Get A Mortgage?

It’s understandable, however, why bad credit can make this process difficult. Ultimately, a lender is doing just that: lending you money with the promise that you’ll pay them back over time. If they freely gave out loans to anyone, a certain percentage might fail to pay, either due to circumstances out of their control or even willingly in some cases. A lender needs to know they can trust you, and that’s why a credit score can be a quick indicator as to who they should spend time dealing with and who they should avoid. However, this also means that certain individuals with bad credit due to no fault of their own will also fall through the gaps and might unfairly not get the opportunity to get a mortgage. This is why certain lenders take the time to get to know their customers and their financial situations before making a decision.

How Can You Improve Your Credit Score?

Having a low credit score isn’t the end of the world either. In fact, it’s fairly straightforward to turn this around and bolster your credit score. The first step is making sure that every single payment is dealt with on time. As well as this, try to avoid going into any unarranged overdrafts with your bank. This will show lenders that you are able to keep on top of your finances. You can then work on increasing your score by acquiring new lending opportunities such as using a credit card to buy regular items and even things like taking out a new phone contract, for example. Be aware of credit card debtand don’t take on too much. These more minor forms of lending will allow you to demonstrate your ability to pay off a loan, and this will slowly start to increase your score.

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