Sep 06 2010

County Court Judgements And Bad Credit Mortgages

Category: Uncategorized — Sarah @ 6:33 am

A County Court Judgement is an order by the courts for one party to pay an amount owing to another party. County Court Judgements, or CCJs, affect people’s credit files and will normally require the applicant to abandon the prospect of applying for traditions mortgage products and instead apply for bad credit mortgages.

When the order is given by the County Court, the creditor will be required to repay the debtor within a specified period of time. If this is not done, a County Court Judgement will be recorded on the creditor’s credit file. This entry can remain on the credit file for six years if it is not settled in the meantime. Having impairments to a credit file such as CCJs can make it extremely difficult to obtain standard mortgages from high street lenders.

Because County Court Judgements are so common, a large number of people are unable to apply for standard mortgages. This could be viewed as unfair as CCJs can be recorded on a person’s credit file for trivial amounts of money and sometimes without their knowing. The massive growth in the number of people who suffer from this form of adverse credit has lead to incredible growth in the market for bad credit mortgages in recent times.

In addition to mortgage applications being affected by outstanding County Court Judgements appearing on a credit file, CCJs that are paid in full at a later date can remain on the credit file for up to six years. Lenders will therefore be able to see that there was once an outstanding debt despite the fact that is has since been cleared. Although the entry will indicate that the debt has been settled, it may not be removed completely. This means that a person may be forced to apply for bad credit mortgages several years after paying off their County Court Judgements.

Many lenders will now consider mortgage applications from people who suffer from bad credit. In fact dozens of specialist lenders that focus solely on bad credit mortgages have appeared in recent years so individuals who have bad credit will not necessarily be unable to buy a home. Although the recent credit crunch has seen such lenders dwindle in numbers in recent times, specialist lenders still exist and offer mortgage products.

Because the market for bad credit mortgages is highly specialised and many of the lenders are too small to open their own branches to the public, it may be necessary to apply for bad credit mortgages through a mortgage broker.

An independent mortgage broker will be able to search the entire market for bad credit mortgages using special software. This can save both time and money when compared to searching for a mortgage on your own because an independent mortgage broker will have access to the entire mortgage market and will be able to find the most suitable bad credit mortgages to suit your personal situation. If you require a bad credit mortgage product contact an independent advisor today for impartial advice.

Get expert advice from impartial Mortgage Advisors on various home loan products including Bad Credit Mortgages today at UK Mortgage Source

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Aug 24 2010

Know Your Credit: Steps to Take Before You Apply for a Mortgage

Category: Uncategorized — Sarah @ 11:14 am

Your credit rating is one of the most important numbers in your life – it determines whether you will qualify for and how good an interest rate you will receive on car loans, store cards and credit cards, as well as a mortgage. Many financial advisers may tell you that it is essential to have a good credit score before you can even think of applying for a mortgage, and that it may take up to six months (and sometimes even longer) to fix poor credit.

Once you apply for a mortgage, the lender accesses your credit report, which is based on information supplied by the three main credit-reporting agencies – Equifax, Experian and TransUnion. Your credit score should be somewhere between 300 and 850; this score is based on factors such as the length of your credit history, your available credit, the amount of credit you have used, and employment history. This number is your FICO score (named for the Fair Isaac Reporting Company).

Mortgage lenders look at several risk factors when deciding whether to approve a mortgage. A potential home buyer who pays all their bills on time and does not have more credit than they can deal with is probably a safe risk when it comes to lending them the cost of a home. The higher your credit score, the more options and better interest rates you can quality for. A score of 760 or over is considered risk-free by the mortgage industry; a score between 600 and 700 is still good.

A credit score of less than 500 means that it may be difficult to find a lender who will work with you, although it is not impossible. Some lenders – known as sub-prime lenders – specialize in loans to buyers with poor credit, although your interest rate may almost certainly be higher. Some other options are to increase your down payment if possible, or to apply for an FHA or VA loan, which use different criteria to qualify borrowers.

So what should you do if you are buying a house, but do not have the best credit in the world? Amazingly, around 25% of credit reports have serious errors in them which can significantly affect the interest rate you are offered – so the first thing you should do is to check yours and make sure it is accurate. It is fairly easy to fix any mistakes on a credit report, although it can take several months, so it is a good idea to check your report before even beginning the house buying process.

Think twice about buying a new car if your credit is less than excellent – the amount of credit given to you can affect your score and the interest rate you are offered. Unless your credit is excellent, try to wait and buy the car – or any big purchase – after you have closed on your new home. You may consider buying a second hand car or paying an existing car loan off earlier, if possible. Buying a home and then buying the car should not affect your credit rating, by the way.

If you have several credit cards, try to get the account balances down as much as you can before you apply for a mortgage – ideally, to around 30% of their limits. Better still, just do not use one or more of your cards, although you should still keep the accounts open to prevent losing points and to show that you still have available credit. It is also worth calling your credit card company to inquire about lowering the interest rate and to remove any late or skipped payment records.

Try to keep at least one long standing credit account – if you have had a credit card for several years, keep that one. Lenders approve of borrowers who have a long credit history and can show some stability. If you have department store credit, try to pay this off and keep an actual credit card. You may see an improvement in your credit score if you go for several months without applying for any new credit or loan; although checking your own credit score will not affect it.

Paying your bills on time also helps build up your credit score. We all miss a payment occasionally, but you should not do it too often. Lenders are looking for a record of timely payments and stability; in fact, this is the single biggest factor when it comes to your credit score. If you know you are going to be late paying a bill, notify the lender involved – this may allow you to keep the late payment from affecting your credit score.

If you are planning to buy a house, it is worth taking the time to understand how the system works – especially when an interest rate of just one point less can mean a savings of around $50,000 on the average 30-year mortgage.

Mike Cole is a freelance writer who writes about topics and financial products pertaining to the mortgage industry such an adjustable rate mortgage available from a mortgage lender.

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Aug 15 2010

How Credit Rating Impacts a Mortgage Application

Category: Uncategorized — Sarah @ 2:27 pm

As everyone knows, your credit rating is one of the most important numbers that you have – it affects your ability not only to get a mortgage, but a car loan, credit card, or store credit, as well the interest rate you are given. A good credit rating is so important that some financial experts even advise you to make sure you have a good credit rating before even thinking of applying for a mortgage.

When you apply for a mortgage, the lender can access your credit report – a report that is compiled by information supplied by the three main credit-reporting agencies, Equifax, Experian and TransUnion. Your credit score is going to be somewhere between 300 and 850, based on your record of paying back loans in the past. This is known as your FICO score, after the company who analyzes the information from the three agencies, the Fair Isaac Corporation.

Your all-important credit score is based on several factors, including the length of your credit history as well as the credit you have available and the amount of credit you have used. Whereas everybody is late with a bill occasionally, a lender is also looking for a stable record of paying bills on time – too many late or missed payments can have an adverse effect. Your employment history and the number of credit cards issued to you are also important factors.

It is basically all about the risk factor – home buyers who have a history of paying back loans and paying bills on time have much less of a chance of defaulting on their mortgage loan and are therefore less of a risk. The mortgage industry has calculated that if a person has a high credit score – for example 780 – the chances of them becoming three months behind in their payments are almost 1 in 600 and statistically, a person with a low credit score of 600 has a 1 in 4 chance of becoming three months behind on payments.

Borrowers who have high credit scores – defined as being 760 or over – will generally have more choices available when it comes to qualifying for a mortgage, as well as being able to benefit from lower interest rates. If you have a score in the 600 to 700 range, you will not have any trouble getting a loan for your new home – but you may be paying back the loan at a higher interest rate.

Generally speaking, a score of around 500 is about the lowest that will qualify for a mortgage. If you fall into this category, you may have to shop around to find a lender that is willing to work with you; and your interest rate will probably be higher. Some lenders specialize in providing loans to borrowers who have poor credit – these lenders are often referred to as sub-prime lenders. One possible solution for those with a very low credit score is to consider applying for an FHA loan, which tends to use different criteria to qualify people.

A low credit score can make a big difference in the amount for which you will qualify, as well as the amount of your monthly mortgage payment. An interest rate of just one point less will mean a savings of around $5,000 on the average 15-year mortgage and even more on a typical thirty-year mortgage – around $50,000. In addition, a credit score below 630 can mean monthly payments that are between $50 and $250 higher.

There are some things you can do if you need to raise your credit score. Firstly, check your credit score and make sure it is accurate – an estimated 25% of credit reports have what might be described as serious errors on them. These mistakes can be corrected, but this can often take up to several months – not an ideal situation if you are just about to apply for a mortgage. Even a small error on your report can affect your score and the mortgage interest rate, which you are offered.

If at all possible, try not to make a major purchase such as a new car just before applying for a mortgage, as it will lower your credit score. And pay off as much debt as you possibly can – this will help to lower your debt to income ratio and raise your score. If there are some small outstanding debts on your credit report, consider taking care of them before applying. Do not let bad credit stop you from applying for a mortgage – even with a low score; it is still possible to be a homeowner. Your credit rating is very important when it comes to obtaining a mortgage and it can affect your chances of purchasing that new house. If your score is low, consider looking into ways to improve it, and you should be able to get a mortgage at a great rate.

Brian Jenkins is a freelance writer who writes about economic issues and financial products pertaining to the mortgage industry such an adjustable rate mortgage or the lowest mortgage rate.

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Aug 12 2010

In Depth Look at Bad Credit Mortgages

Category: Uncategorized — Sarah @ 3:38 pm

The word ‘bad credit mortgages’ is one word that many borrowers try to avoid but some or the other way find themselves trapped in the situation. If you have a bad credit history, there is nothing to worry about when you have to finance your house. You can consider bad credit mortgages to get through this situation.

What are these Mortgages?

Other terms for these mortgages are adverse credit, subprime mortgages and impaired credit. These mortgages were designed for those borrowers, who have a low or bad credit history. There are mainly three basic stages of these mortgages such as light, adverse and heavy. The cost of these mortgages determine in which category of mortgage you may belong.

Need of such Mortgages:

Bad credit mortgages serve as your last resort of loan with a bad credit score. The reasons for why your credit score is bad are either you have been defaulted or have been late to pay your debts. The cause of your bad credit score may also be due to late payment of credit card bills, mobile phone bills or even tax payment. Due to these reasons, the judgment of the court may go against you. More number of judgments against you, the more it affects your credit score and higher are the level of mortgages you need.

It is not necessary that it is always your fault, in case you have to apply for these mortgages. Sometimes, certain situations like collapse of business, illness in family or divorce are reasons, due to which you may have to apply for these mortgages.

There are differences between such mortgages and standard mortgages. The main difference is the cost factor. Bad credit mortgages may be more expensive than the standard mortgages, depending on your circumstances. These types of mortgages require large deposits compared to standard mortgages and you may be at high risk in the eyes of lenders. Such mortgages may need you to pay huge upfront fees, which is not necessary in standard mortgages.

Applying for These Mortgages:

It is an easy process to apply for such mortgages, but you need to be aware of all the terms before applying. Try to look for mortgages that do not have any tie-in procedure for more than three years. There are various institutions, where you may apply for these mortgages and it is best to apply in a government certified institution rather than a private lender. Go through all the terms and conditions properly and check for the interest rates too.

However, it is not necessary that you have to stick with bad credit mortgages for your life. All you need to do is show some proof that you are able to repay the loan successfully for a particular period, say about three years, and then you are eligible for a cheaper mortgage.

Other way of getting rid of your mortgages is by paying up all your monthly credit payments on time, so that your credit score increases. This may take some time, but the method will surely help in getting rid of mortgages.

Find secured credit cards and more Tom’s work at FINDsecuredcards.

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Jul 13 2010

What Lenders Look For: Good Credit Improves your Mortgage Negotiations

Category: Uncategorized — Sarah @ 4:37 am

Contrary to what you may think, you don’t manage your credit applications and payments in a vacuum. Your credit behavior (as some have learned the hard way) is tracked by credit bureaus such as Equifax Canada and TransUnion of Canada.

This information is tabulated, and then you are assigned a credit rating. It’s important for you to maintain as high a rating as possible. The following information shows you how you can be sure to earn a good score, and why it’s so important to do so.

Lenders Have Access To This Information.

Think about it. When you decide to apply for a mortgage for a home purchase, or a hefty loan for home renovation – don’t you want A+ right up there beside your good name?

Your Good Name Is Really What It’s All About.

In the financial world, your credit profile is your reputation. If you have a good record, it means smooth sailing ahead for you. If your record isn’t all it should be, you might be in for a bit of rough weather when it comes to acquiring the monies you need — at the interest rates you want.

Your Payment History.

Credit card debt — is one of the most important factors considered when your score is being tabulated. Any missed, late, or neglected payments are duly noted. Not only does a prompt payment history buff your credit image — it saves you money in interest, and assures a quicker retiring of that debt too.

Timeliness Of Payments.

Actual amount of payments, the state of your credit card balances versus credit available, the number of cards you own, the frequency of your requests for more credit – These are just some of the tidbits of personal financial information that make up your credit profile. This comprehensive history is compiled to show lenders how reliable a debt risk you are. To put it simply they want to know whether or not you are credit worthy.

Your credit score is established with a mathematical formula.

Various factors are weighed and balanced and given a certain percentage value towards your final score. Credit bureaus also take into consideration — in addition to factors already mentioned — your existing debt burden, your actual and potential income (remember you do give out these details when you apply for credit), your debt to income ratio, your past financial problems (any bankruptcy or foreclosure remains a long time on record), your job stability -

essentially any piece of public information that helps build an accurate as possible risk assessment of you as debtor.

Your Credit Rating Is A Fluid And An Ever-Changing Thing.

It is dependent upon your present financial circumstances and any actions you make. The credit bureaus always follow your money trail. Because the formation of your profile is an on going thing, it’s vital for you to consistently practice reliable and responsible debt handling. The good news? The ever-changing quality of your credit rating allows you to continually aim for a higher score. Think of your rating — not as a burden — but as a challenge and an opportunity.

Infrequent Requests For Additional Credit?

That’s a really good sign to a lender. Keep in mind that mortgage and loan shopping won’t impact you negatively if it’s done in a concentrated time period. The credit bureaus interpret this flurry of activity positively — as long as it doesn’t occur too frequently. You want to look savvy, not desperate.

How Much Plastic Is Too Much?

Too many credit cards red flag you to potential lenders. Limit your cards to three or four, and try to maintain longtime use of at least one card. This is a key way to build up an excellent credit history. The amount of credit you use, versus credit available, is really telling too. Keep your balances low.

It’s Your Right To Pull Up Your Credit Report Profile.

This is something that is in your interest to do so. (You can do this online at www.equifax.com). Experts advise you to check it out at least once a year. Doing so gives you the opportunity to correct any errors or misinformation that may be there. Practice reliable and responsible debt management.

Then, when you do actually need money for a major undertaking (like the purchase of a home), your credit rating will be an asset, not a liability.

The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.


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