The devastating financial implications of the pandemic mean that many people have fallen into arrears for credit commitments. These credit file ‘black marks’ can make accessing property finance difficult, but as Jeni Browne explains, not impossible, thanks to a new buy to let product range.
The term ‘adverse credit’ covers a broad range of scenarios; from a five-year-old missed mobile phone contract payment, to loan defaults, County Court Judgements (CCJs) or mortgage arrears.
While many landlords have pristine credit scores, there are many whose file is blemished to some degree. The vast majority of buy to let lenders will overlook a minor slip up, such as one missed credit card payment (an unsecured credit line) three years ago; however, beyond that it becomes more complicated as to which lenders will accept what. Every lender has a unique credit scoring algorithm, which is different again to those used by online scorers like Experian and Equifax. You may have a 999 score on Equifax, but with some lender’s you’d fail their credit scoring, which could come as a huge shock and is incredibly irritating (and often expensive).
While lenders do not share their credit scoring criteria with anyone, an experienced broker will know who accepts what and how much unsecured background debt buy to let lender players will accept. Your broker should also be able to speak to lenders about your particular circumstances to get a better understanding of whether your application will fit into the lender’s policy before applying.
Unfortunately, COVID-19 has impacted many people’s finances over the last few months, causing them to fall behind on payments. While you may have limited property finance options for the next few years, you are unlikely to be excluded from it completely. Lenders recognise that the current situation has affected the credit scores of many people who previously had a spotless record. One lender, in particular, has just launched a whole range geared towards those exact people.
The way this particular range of buy to let mortgage products works is using a tiered system to fit around varying levels of adverse credit. They don’t use a credit score algorithm, but review your credit file and cascade your application onto the product which best fits your credit history. Here are the highlights:
• Defaults do not need to be satisfied, can be registered as recently as 12 months ago and there is no value limit on the defaults
• CCJs registered as recently as six months do not need to be satisfied
• Two individual utility, communication or mail order account defaults up to £150 each, ignored
• Missed mortgage payments considered after 12 months
• Discharged bankruptcies over six years ago
While this is not the only lender who will consider adverse credit, it’s fantastic to see a lender adjust to the current climate and set their standpoint so clearly in the market.
If you’re concerned that your credit score will exclude you from property finance, get in touch with our expert brokers who will be able to advise on the types of lenders that may be available to you contact me directly on 01732 471647 or email email@example.com. Or to contact our expert team, call 0345 345 6788 or email firstname.lastname@example.org.
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