Can I get a mortgage with bad credit but a good income?

If you’re not in a rush to secure a mortgage, you might feel it’s worth repairing your credit score and applying for a mortgage when it has improved.

To do this, it’s important to understand why you have a poor credit score. Here are some of the most common reasons.

• No credit history. A lot of people have a bad credit score because they have no history of making timely repayments. If you’ve never borrowed money or set up a direct debit, it’s likely your credit score is stuck on 0.
• Late repayments. If you make a late repayment of a bill or direct debit, this will damage your credit score.
• Unauthorised borrowing. Going overdrawn with your credit card or current account can seriously harm your credit score.
• Too many credit checks. Every time you’re subjected to a credit check, your score is lowered. You’ll be credit checked every time you apply for a financial product, so it’s best not to apply for too many.
• Falling into serious debt. Serious debt can cause serious damage to your credit score. It will take a lot of time to repair your score after you’ve suffered a CCJ, IVA, default, debt management plan, repossession or bankruptcy. In fact, some lenders will flat-out refuse applicants with any of these in their recent credit history.
• Being “financially linked” to someone with bad credit. If you take out a financial product jointly with someone else, you’ll remain “financially linked” with them until the product is closed. That means lenders will consider their credit score, as well as yours, when you apply for a mortgage. If the other party’s credit score is poor, this will harm your chances of a mortgage approval.
• Mistakes on your credit report. It’s possible that your credit report has an error on it that’s harming your score. It’s worth checking your report and amending any errors you spot. You can do this by contacting any of the three major UK credit reference agencies: Experian, Equifax or TransUnion (Callcredit).

• Save a bigger deposit. Lenders will consider your income relative to the amount of money you’re trying to borrow. With a larger deposit, you won’t need to borrow as much money from the lender and your application will be viewed more favourably.
• Reduce your outgoings. Lenders will check your recent bank statements to determine whether you can afford your monthly mortgage repayments. The lower your outgoings, the more favourably they will view your application, so take some time to shop around for the best deal on your bills and reduce any debts you’re paying interest on.
• Show job security. If your income comes from a stable full-time job, this will support your application. Self-employed, part-time or commission-earning workers tend to have a tougher time getting approved with a poor credit score.
• Get some government assistance. You can reduce the amount you borrow from lenders by taking part in a government home-buying scheme. Using the Help To Buy mortgage deposit scheme, you can borrow up to 20% of your property’s value from the government to add to your deposit. Using a Help To Buy ISA or Lifetime ISA, you can claim free money from the government to put towards your deposit. There is no maximum earnings limit for these products, but make sure you read the terms before applying.
• Apply for a joint mortgage. If you apply for a mortgage jointly, the lender will consider the total income of all applicants. If your co-applicant(s) have a better credit score than you, it’ll boost your chances of being approved. However, you’ll be equally responsible for mortgage repayments and will have to agree on when to sell.