Remortgaging Options for People with Bad Credit

Credit issues continue to be global phenomenon, stretching from the UK to Japan. In light of reducing remortgage interest rates and shrinking maximum spending limits, many consumers are facing tinged credit records. For someone who will rely on home financing in the future, the impact of a bruised credit history can be long lasting.

Homeowners develop bad or bruised credit for a myriad of reasons. It is often the result of a reduction or total loss of monthly income caused by circumstances like illness, job loss, or divorce. Regardless of your reason for experiencing bruised credit, it is important to know that with a positive outlook and some decisive action, you are likely to qualify for a home remortgage.

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How Banks Judge Your Credit for Remortgages

Although most lenders have a few credit guidelines that are unique to their operation, most rely heavily on the information they obtain from the credit reference agencies to determine your credit worthiness.

The credit reference agencies in the UK, which are Experian, Equifax and Call Credit, compile information about your credit history. They also provide a report about your bill paying habits to creditors who subscribe to their service.

When you obtain loans or credit cards, the payment details for that loan remains on your credit report for six years after the loan is satisfied or closed. The report also contains public records like judgments, liens, bankruptcies or repossessions. Additionally, when you perform a search for credit, it is remains noted as credit actvity for two years.

Two Strategies to Beat the Remortgage Game

There are no hard and fast rules for who gets credit and who doesn’t. You may be denied by one lender, but approved by another with no change in your credit record. If you are in need of obtaining a remortgage but have bruised credit, here are a couple of helpful tips:

1. Become a remortgage detective. Do your homework. There are many mortgage professionals who claim to be experts in servicing the bad credit mortgage market. They may or may not have the expertise you need. Ask questions about the type of clients they serve, what products they offer and what their rate of success has been in recent months. It doesn’t matter if they were generating loans at lightening speed a few years ago. What they do successfully now is what you need to know. Talk with both mortgage brokers and bankers to see who can truly provide you with the best loan.

2. Learn the credit game. Be proactive. Check your credit record before pursuing a home remortgage loan. The Data Protection Act requires that credit reference agencies provide you with a "Statutory Credit Report," which you can obtain it for about £2. This will give you the opportunity to correct errors or disassociate yourself from family members with whom you have no financial connection. Satisfy as many outstanding debts as possible before applying for a remortgage. Make sure you have written documentation to support your claims about your credit history. The more you take an active role in dealing with your bruised credit now, the faster that county court judgment, late payment or individual voluntary arrangement will be behind you.

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