Remortgaging refers to replacing an existing mortgage with a new one, often with a different lender. People may choose to remortgage for various reasons, such as to obtain a lower interest rate, to change the length of the mortgage term, or to release equity from their home.
- UNDERSTANDING YOUR CREDIT SCORE:
Your credit score is a number representing three digits for an individual’s creditworthiness. It is based on information in your credit report, which is a credit history record. the range of credit score is from 300 to 850, with higher scores indicating a lower risk of default. Credit scores are calculated using a variety of factors, including your payment history, the amount of debt you have, the length of your credit history, and the types of credit you have. Payment history and the amount of debt you have are the most heavily weighted factors, followed by the length of your credit history and the types of credit you have. To check your credit score, you can request a copy of your credit report from one of the three major credit bureaus: Equifax, Experian, and TransUnion. You are entitled to one free credit report from each bureau every year. Alternatively, you can use a credit score service or check your credit score free through your bank or credit card company.
- BAD CREDIT IMPACT ON REMORTGAGING:
Having good credit may make it easier to secure a good mortgage rate when remortgaging. Lenders consider credit score a key indicator of your ability to make timely payments, so a low credit score may lead to higher mortgage rates or even denial of a mortgage. However, it is still possible to remortgage with bad credit. You may have to pay a higher interest rate or make a larger down payment, but options are available to those with less-than-perfect credit. Consider working with a mortgage broker or a lender that specializes in working with borrowers with bad credit.
- IMPROVMENT IN YOUR CREDIT SCORE:
If you are planning to remortgage and have bad credit, it may be worth improving your credit score before applying for a new mortgage. Here are some steps you can take:
- Make all of your payments on time: Payment history is the most heavily weighted factor in credit scores, so it is important to make all payments on time. This includes credit card payments, student loan payments, and any other debts you have.
- Pay down your debts: Your debt is also a key factor in credit scores. By paying down your debts, you can improve your credit score.
- Don’t apply for new credit unnecessarily: Every time you apply for new credit, it results in a “hard inquiry” on your credit report, which
CONCLUSION:
If a person has bad credit and still he is considering remortgaging, it is important to understand your credit score’s impact on your mortgage rate and options. While it may be more difficult to secure a good rate with bad credit, options are still available. To improve your chances of being approved for a mortgage, it is a good idea to improve your credit score before applying. This may involve making all your payments on time, paying down your debts, and avoiding unnecessary applications for new credit. When shopping for a lender, research and compare your options. This may include working with a mortgage broker, considering lenders specializing in dealing with borrowers with bad credit, or exploring government programs. Consider alternatives to remortgaging, such as refinancing with a home equity loan, renting, or selling and moving.
