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Mortgages and poor credit ratings

Past financial difficulties can affect your borrowing today. If you've got a bad credit rating from missing a debt repayment in the past, it could mean it's hard for you to get a mortgage.

This can seem unfair when your current financial situation means you have no bad debts.

But lenders need to be cautious, particularly in the current difficult economic situation, and if they see you've had problems in the past they might well consider you too high a risk to lend money to.

Some lenders may automatically reject an application from someone with a poor credit rating.

The rejection itself may then be recorded as part of the credit rating - which can make it even more difficult to secure a loan or a mortgage in the future.

If you have a black mark against you, first make sure it's accurate - get a copy of your credit record from one of the agencies (Equifax, CallCredit and Experian) to check. If there are any inaccuracies, ensure you get them altered immediately.

You can do this by contacting your lender or by contacting a credit reference agency and asking them to contact your bank for you. You can also add a 200-word statement to your credit report to explain the mistake and ask a credit reference agency to add this to your report - this is called a Notice of Correction.

If your credit report is correct, however, to get a mortgage you will probably need the help of a specialist broker.

Lender Initial Rate Duration Standard Rate Overall Cost For Comparison Max Loan To Value Fee
2.59% 2 years 5.69% 5.4% APR 75% £999
2.69% 2 years 4.99% 4.9% APR 75% £495
2.94% 2 Years 5.69% 5.4% APR 75% £199
2.99% 2 years 4.99% 4.9% APR 85% £495
2.99% 3 years 4.99% 4.6% APR 70% £499
3.0% 2 years 5.69% 5.5% APR 80% £999
3.19% 5 Years 4.79% 4.2% APR 80% £995
3.35% To Jul 2014 4.95% 4.6% APR 75% £999
3.5% 2 years 5.49% 5.1% APR 75% £595
3.84% 2 years 3.94% 4% APR 90% £499

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