Wondering what has affected your ability to secure a mortgage? One of the largest considerations that lenders take into account when assessing your application is your credit rating. As a summary of all your credit-related activities, this document can reflect your dependability as a borrower, setting the benchmark against which they will judge your ability to meet your repayment obligations.
When putting together this document, credit reporting agencies take stock of your history and label you with an overall score, which is what many lenders initially look at. However, there are a number of things that can undermine this score. Bad credit home loans are designed for just this scenario, but here are two of the top reasons you might have an impairment on your record.
Utility bills
Electricity, gas, internet or mobile phone charges are part of everyday life. Whether the due date slips your mind or you’ve been unable to pay the bill, an overdue or missed payment can leave a mark on your credit history. According to credit bureau Veda, your utility provider can only list the event if the missed payment is over $150. Even if you make the payment, it will stay on your report for five or seven years – but your provider will need to update it as ‘paid’.
Credit cards
Whenever you take out a new credit card or extend the balance on your existing account, these actions will be listed on your credit report. If you have a clean slate and make all the necessary payments on this debt, then you should have no issue applying for a home loan. However, a lender can also look at the number of debts you have at one time – if you have a number of cards with rotating debt, combined with a number of missed payments, they may decline your application.
Fortunately, this is where bad credit mortgages can come into play. If you are plagued by past credit infringements and circumstances outside your control, such as illness or a business breakdown, have impacted your finances, a Redrock specialist broker can help.
