Is it possible to remortgage your home with a bad credit score?

You can think of remortgaging your home if you’re facing problems to repay your home loan at the current rate of interest. A remortgage (term used in UK), similar to a mortgage refinance (term used in USA), is a process by which you take out a new home loan in order to replace the current one. However, you need to check your credit score before applying for a remortgage loan.

How credit score influences remortgage

The main reason behind remortgaging your home is to get a better interest rate on your new home loan. Your chance of getting a better interest rate increases when you have a good credit score. Likewise, it may become difficult for you to get a suitable rate on your mortgage if your score is not so good. In such a situation, you may opt for a bad credit remortgage.

How to qualify for a bad credit remortgage

The lenders are usually reluctant to offer bad credit remortgages. So, before granting your bad credit remortgage request, the lenders take into consideration certain factors that are given below.

Loan-to-value ratio – The lenders check the loan-to-value ratio of your home in order to decide how much loan amount you can qualify for.

Source of income – You should have a steady employment so that you can make your monthly payments on time. The lenders will assess your income in order to determine whether or not you’ll be able to manage your potential monthly mortgage payment along with paying off other debts.

Usually, the lenders increase the interest rate on your new home loan in order to cover the risk attached to a bad credit remortgage. Therefore, it is always better to raise your credit score before remortgaging your property.

How to improve your credit score

You can follow these 4 steps to raise your score to some extent before applying for a remortgage.

Find out the reason for your low score

It is quite necessary to know the reason for your low score. To do this, order and check your credit reports from the 3 major credit bureaus, namely, Experian, Equifax and TransUnion.

Review the credit report properly

Review the credit reports to find out whether or not there are any errors that may affect your score negatively. Look out for defaults, late payments or accounts that don’t belong to you. Make sure you also check out the number of inquiries in your report. Sometimes, credit card companies check your report without your permission before sending you an offer through mail. If required, request your credit reporting agencies to inform you before giving out any credit information to anyone.

Correct any inaccuracies

The negative entries usually stay for 7 years in your report and 10 years in case of bankruptcy. Try to resolve any other discrepancies that might have been wrongly reported in your report. You may contact a lawyer if you’re unsuccessful in your attempts to remove the wrong information from your credit report/reports.

Reduce the percent of available credit used

You need to reduce the percent of your available credit used in order to increase your credit score. So, pay off your credit card balances and increase your credit limits. You should try to reduce the balance as much as possible but don’t close your credit accounts as it may affect your score negatively. You should also not open a new account as it may bring down your score to some extent.

By following these methods, you’ll be able to raise your credit score to some extent, which in turn, will help you to get a remortgage at favorable terms and conditions. If required, get a rapid rescore, that is, get your score recalculated in a few days to find out your new score. However, you may have to take help of a company who specialize in rescoring and also have to pay a fee for it.


Keyphrase: remortgage, credit score

Description: Know what lenders look for before offering you a bad credit remortgage loan. Check out how to raise your credit score before applying for a remortgage loan.