Hi there, hi all!!!! I am Jacob Smith, now a proud owner of a home. My status of a homeowner was never easy to attain, and a big reason for this was my poor credit score☹. Some past financial mistakes pushed me in bad credit situation. Every time I made up my mind to buy my home, my credit score performance was there to obstruct my path.
I am a tough soul and decided not to surrender
Attainment of good credit score is not an easy or quick process. You need time and a lot of hard work to put the things back on the track. I made my mind that I cannot sit like this while mourning on my situation. I have to start working.
I worked to organise my personal finances and financial habits
Drop in the credit rating is usually the result of your mistakes, and if you want revival, practical methods need to be followed.
- I Paid off two small but high-interest debts – I had two personal loans and the tenure for both was about to end. In one of them, I had two delayed payments. In addition, the instalments were hefty. I used a part of my savings and paid off the two loans. I had to work on my debt-to-income ratio. Yes, cutting expenses was another important thing to do.
- Successfully bargained on high-interest rate credit cards – I know high-interest debts spoil creditworthiness. I talked to my creditors and managed to get a discount on rates. It happened due to an improvement in my debt-income ratio.
- Updated my latest address on the electoral roll – Mortgage is necessary to buy a home, and the lenders always check you on the electoral roll for address verification. My current residential detailed were not updated there. I did that and felt relieved.
- Started saving money every month – To gather the deposit money, it was necessary to have a big nest egg. I saved 10% every month from my salary of £15000 for 1 year, and in the end, I could save a good amount.
My salary – £15000
Percentage I shared – 10% (every month)
£15000 x 10/100 x12 (months) = £18000 (money saved in one year)
I saved this much as I was worried about the other charges like stamp duty, home inspection.
Now when I was happy with my efforts, I looked for a property
I live in Liverpool and want to stay here the whole life. I started searching for the property here only with the help of the local agents. Every weekend I went on several property visits. I visited around 32 properties, which were very tiring, but its worth if it is about a long-term future investment. Out of those 32, I filtered out 8 and then shortlisted 1 most promising.
Time to get financial support through a mortgage – Struggle starts here
As I picked a two-property option, now I wanted to buy any of them faster and for that mortgage was the evident need. I went through different phases, as listed below.
The property price was – £2,50,000
Location – Crosby
I needed £2,35,000
- My friend gave me the advice to hire a broker AS
Things are not simple for a poor credit score applicant
My friend was not wrong as I talked to a lender about my mortgage need and told about my poor credit score. It was quite reluctant about my credit score performance. After the conversation, I was hopeless. Then I thought to give a second chance and hire a broker.
I searched online for a broker and shortlisted two. 1) John Charcol 2) Shine Mortgages
Both are renowned and reliable, but I chose Shine Mortgages as it does not take any fee from the borrowers. I left a query online and got a reply in just 15 minutes. A mortgage consultant from Shine Mortgages called me with 7 mortgage options available on its panel of 90+ lenders.
- I chose two deals out of the 7 that broker offered but issue was on the loan amount
I selected two lenders as both were offering 95% mortgage on bad credit score. I was stunned at the capacity of the broking company for having such a great deal on the panel for poor credit applicants. However, in both the deals, I was not eligible for the amount I wanted. Credit score stood there as the substantial hindrance. My broker Shine Mortgages is transparent and honest and has practical methods to work on a problem.
- Broker suggested me smart ways to improve the credit score
To qualify for the desired amount, my consultant at Shine Mortgages suggested me some practical ways to improve credit score.
- Do not make ‘buy now pay later’ purchases
- Pay bills on time
- Do not take any new loan
- Do not close the old credit card accounts to show a reasonable length of credit history
- Keep a good saving (which I already did by saving £18000)
- Close the unused bank account with a negative balance
I worked on the above suggestions, and they worked well. I got a promising boost in my credit score.
- Finally I got the approval on the desired amount with a rate lock letter from the lender
When I earned a boost in the credit score, the broker again bargained for me with the two lenders, and one of them got convinced. I qualified the affordability check and applied for the loan.
The process was long, but my broker took care of all the documentation process. One day after the application, I got approved for the funds. I asked for a rate lock letter to make sure that I get the same rate in the end and nothing changes during the loan process. The broker got me that on a letter with the name of the lender and the price fixed for 60days.
Within the 25 working days, I got the funds. The final purchase of the property with the seller was completed in 30 days. My loan instalments are not hefty, and I can adjust them easily in my monthly budget.
Happy ending After a journey of a bumpy road, finally, I could get the money to buy my roof despite the bad credit. Within three months of purchasing the home, I earned back my good credit score as I embraced self-discipline in my financial life. It is how I landed in my house with deep peace. Thanks to my friend John Brown for giving me the right advice and to my broker Shine Mortgages for such an excellent service. You guys can anytime visit my place. ☺