How You Can End Up With an Adverse Remortgage  

Contrary to popular opinion, there's no such thing as a credit blacklist. Did you know half of us don't fully understand what a credit rating is and how it affects our ability to borrow. A third of us have been refused a loan at some point and 40% of this group don't know why. So for those of you who feel you have been "blacklisted" or are being refused credit in some way here is a simple guide that separates credit fact from credit fiction.

Fact 1: Previous occupants at your home do not affect your credit rating: The previous occupants of your house could have been a millionaire or a bankrupt, but that makes no difference to lenders. Lenders are only interested in your ability to repay a loan, so they will look at your individual circumstances. It's a good idea to register to vote, wherever you live. That's one of the factors lenders take into account should you be looking for an adverse/bad credit remortgage.

Fact 2: Family and friends living at your address cannot harm your credit rating: Until a few years ago, lenders checked the credit reports of other people living at your address. They could then take their credit position into account when deciding on whether to offer you credit. However this no longer happens. Instead, your credit report contains a section listing your financial associates i.e. people with whom you share/hold a joint account, such as a joint mortgage with your spouse.

Fact 3: Credit reference agencies do not decide your credit rating:Credit reference agencies gather the information held in credit reports and hold it securely. Lenders use this secure information, along with your application form, to calculate your credit score. Your credit score is a number that represents the risk that you will not repay the amount owed. Generally, the higher your credit score, the lower the risk you represent and the easier you'll find it to get a good deal with lower interest rates, which will save you lots of money.

Fact 4: Your credit rating is not poor because you're on a blacklist:There's no such thing as a credit blacklist. Red-lining - ruling out whole streets or estates - simply doesn't take place and your credit score does not take account of factors such as religion, gender, race or ethnic origin. What does count to most lenders is continuity and how well you have managed your financial affairs over time.

Fact 5: You have more than one credit rating: You can have many credit ratings, depending on who you apply to, what you apply for, and your finance circumstances at the time you apply. Every lender uses a different equation to calculate your credit score. Some also use different versions for different financial products. Your credit rating will also change when your circumstances change. For example, paying off one of your debts might improve your score; while missing a series of repayments could damage it meaning you may have to consider an adverse remortgage.

Fact 6: Past debts do count:Oh yes they certainly do! If you've missed repayments in the past, it stays on your credit report for up to 36 months. With a court judgement, the evidence is stuck there for six years. A discharged bankruptcy stays on record for at least six years but a bankruptcy restriction order is there for up to 15 years. Lenders see these and can mark you down, because they fear you may not be able, or willing, to honour your obligations.

What to do now: Don't worry!. You still may be able to get a remortgage deal with a poor credit rating, CCJ or if you are self employed by using brokers or lenders who offer remortgage products which take these situations into account. Also check your current credit report to ensure it is accurate and up to date. For example, you may have missed a few repayments because of illness or an accident. You can ask to add this on your file where lenders will see this note and can take it into account.

About the Author

Paul Haughney is an online remortgage expert who provides ccj problem remortgage help & advice.