Adverse Credit

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Bad credit can come from a number of things. Late payments might be a form of bad credit, as are defaults, CCJs and debt arrangements. Clients don’t always realise they have bad credit – and this doesn’t affect them until they are applying for a credit card, a loan or, more importantly, a mortgage. By the time they come to us they’ve often got a property in mind and what’s on their credit file might prevent them from buying that home.

There’s also a divide between what clients see as bad credit to what lenders see as bad credit.

One missed payment isn’t going to be as serious as a CCJ on your file, for example. 

In terms of knowing whether you’ve got bad credit, the main way to find out is with credit reports. It’s important to check your credit files. Clients often use ClearScore or Experian and you can check these online yourself. The best credit report to get is https://www.checkmyfile.partners/CQRTHN5/2CTPL/ which you can try  FREE for 30 days, then £14.99 a month with the option to cancel online any time. It combines all three credit agencies: Experian, TransUnion and Equifax all in one report, which is  important when applying for a mortgage, because each lender will check different credit references and credit agencies.

What’s the main thing to look at on a credit report?

Most lenders use credit scores when assessing an application. But specialist lenders often don’t credit score at all, in which case your score doesn’t tend to matter. 

What is important is the detail. If you’ve got a default, when was it registered? How much was the default for? Have you kept up to date with everything since? Has the default been cleared off? 

A lot of First Time Buyers can have a low credit score without bad credit. It doesn’t mean that something’s gone wrong, it just means you’ve not taken any credit – so it’s difficult for a lender to know that you can manage a mortgage. It can be a good idea to take out a credit card before you start thinking about buying a home.