If you are suffering from credit problems in your past, so that you are finding it hard to get a mortgage, or can only get a bad credit mortgage, you may well feel very ashamed. Perhaps you are wondering what steps you can take to improve your situation.
There are two major ways you can do this.
1. One type of bad credit mortgage you can get is a “credit repair mortgage”. If you enter into this type of arrangement, you will have to pay quite a high deposit and a high rate of interest. However, once you have taken this out, a good independent broker will keep in touch with you and encourage you to keep up your repayments on your mortgage. If you do this successfully for about three years (depending on the seriousness of the problems you have had), your credit rating should have improved sufficiently to enable you to switch to a standard mortgage with much more competitive terms. The broker is crucial to this. You need one who will stay in touch and judge when you are in a position to switch, and actually help you with the process
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2. The other thing you need to do is take control of your finances. It’s essential that you face up to, and sort out, whatever problems led to this situation in the first place. Contact all your lenders and card companies and come to an arrangement with them. Most of them will accept a lower monthly payment if they believe they will eventually get their money. And get rid of as many cards as you can – the fewer cards you have, the better it will be for your credit rating. Plus, the less temptation there will be to spend on them. It’s no good making the effort to keep up the payments on your credit repair/bad credit mortgage, if at the same time you are over-spending in other directions or running up further credit card balances. Just don’t make ANY further credit card purchases!
You will find that these measures mean you have to reduce your standard of living for a while. But it will be worth it if at the end of the period you are back with a reasonable credit rating. Once you have switched from your bad credit mortgage and your mortgage payments are reduced, you can give yourself a (modest) treat! But make sure you stick to your new regime and don’t ever get back into that situation again.
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