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LIFT - bad credit history?

Publised date : 01 Feb 2019

If I have a poor credit history does it mean I can’t benefit from LIFT?

LIFT – the Low-cost Initiative for First Time buyers – can help you buy a home in Scotland providing you are UK citizen, or have right of residence in the UK, and are either:

  • Currently renting from a local authority or a housing association
  • Are disabled;
  • Or are serving in or have left the armed forces within the past two years.

You must be able to provide a minimum 5% deposit and the Scottish Government – or a housing association – will then add its stake, interest free, to your deposit. By doing this, they reduce the amount you need to borrow through a mortgage, making your repayments more affordable.

If you wish to be considered, then you must be planning to use LIFT as a first time buyer, and you must be planning to live in the property you buy.

You will also need to have a good credit rating.

Your existing income and level of borrowing will both be assessed when a lender calculates how large a mortgage they will offer, and what interest you will be charged. Lenders are looking to see that you are reliable, stable and do not already owe more than you can comfortably repay.

What if your credit history is already poor?

You may have to try to improve your credit rating before applying for the mortgage. You can take certain steps now to improve your credit rating, and be ready for when you want to apply for a mortgage.

Remember, if you have been refused or declined credit you are allowed to ask why… and you can also request the name of the agency that provided the credit reference used. So begin by checking that the records they hold on you are accurate.

Steps to take immediately

  • Ensure your credit record shows your correct current address
  • Register for the electoral roll
  • Close any unused credit cards, store cards, direct debits and mobile contracts, as some lenders will consider not just the amount you currently owe but the total amount of credit you have access to.
  • On the cards you have used and owe money to, set up direct debits for the minimum amounts to be repaid, so that you wont miss any payments
  • Try to repay more each month than just the minimum repayment due, even by a few pounds

You can also use a prepaid card to help repair a bad credit history. It can be set up without a credit reference check, because you aren’t borrowing, but the repayment record will improve your credit score over time.

Your credit history can also be affected by current or past financial associates; people with whom you’ve shared a joint credit card in the past, because their circumstances might affect your ability to repay. So, if you split up with your partner and no longer have any joint liabilities, inform the credit reference agencies. You’ll find their details online. That will stop your ex from having an undue influence on your own credit score.

General

Your home may be repossessed if you do not keep up repayments on your mortgage.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

 

DISCLAIMER

The information and content contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

Financial Planning Union is a Trading Style of Positive Solutions (Financial Services) Ltd.

James Irvine is not authorised to give financial planning advice but could refer any queries to a financial adviser within Positive Solutions (Financial Services) Limited.

Positive Solutions (Financial Services) Ltd is authorised and regulated by the Financial Conduct Authority.

Registered as a Limited Company in England and Wales No. 3276760. Positive Solutions, Riverside House, The Waterfront, Newcastle upon Tyne, NE15 8NY.

Tax Planning, Commercial & Agricultural Mortgages and Buy to let Mortgages are not regulated by the Financial Conduct Authority.