Bridging Loans With Bad Credit

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• Bridging Loans If I have Bad Credit?
• How do I get Bridging Loan If I have Bad Credit?
• Bridging Loans With Poor Credit?
• What Credit Issue will Bridging Lenders accept?

Unfortunately, a credit check is a vital part of applying for any kind of finance, and it will never be possible to obtain a bridging loan without one. During the application process, both your broker and the lender will conduct a credit check as a matter of routine, so it will be important that all the information on your credit records is accurate, up-to-date and as positive as possible in order to show your borrowing patterns in the best possible light. If you have recently been through the process of getting a mortgage or remortgage, then you may have already taken steps to correct any inaccuracies and improve your credit history by settling past issues where possible and making prompt payment of all current instalments or balances when due.

It’s worth bearing in mind that a credit check protects the potential borrower as much as the lender. It could be that you are in a more serious financial position than you or the lender realised and would not be in a position to service the additional debt. Without a check, you could be granted a loan that would most likely put you in even deeper financial trouble, further impacting your ability to run your household, keep a roof over your head and maintain the wellbeing of those around you, let alone obtain more finance in future.

You may be worried about what a credit check will reveal, but, when it comes to your finances, accepting any problems and finding a way to tackle them is always the most positive route forward. You should also bear in mind that while your credit rating as compiled by Equifax, Experian and TransUnion (the three main credit reference agencies) will deliver a numerical score, lenders will rarely base their decisions purely on these results. Instead, they will consider your broader credit profile and current borrowing habits and transactions, to get a fair picture of your creditworthiness.

The overall perceived level of risk will be more important to a bridging loan lender than the results of the credit check, so you should not worry about falling victim to a ‘computer says no’ style of approach. Your credit profile is just one part of the application process, and not the only thing they will consider when deciding the interest rates they are willing to offer on the loan.

First, the good news: you only have a low credit score, not a bad score or a history of severe credit issues. Any challenges you face in your search for a bridging loan will be relatively minor compared to potential borrowers with more serious financial issues or a history of bad credit. The other good news is that lenders of bridging loans typically concern themselves less with your credit score and more with ensuring the loan is secured against assets and you have a solid repayment or exit plan, so a low credit rating is really only a minor setback. You should certainly be able to get a bridging loan with a low credit score.

What causes a low credit score? You may have one due to one or two minor blemishes on your credit record, such as a missed or late payment on your phone bill or overdraft arrangement. Or it could be simply because you haven’t made much use of borrowing or credit – with too little or no credit history, there is not enough information about your approach to finance to make a judgement. Lenders will recognise this and, rather than view you as an outright default risk, take it into account when deciding what interest rate to charge.

In all these cases, our task as a broker is to present your application as thoroughly as possible, with full details of your income and assets, to make a lender’s decision as easy as possible. Bridging loan providers usually conduct their assessments and underwriting on a manual basis, meaning they will look at all aspects of the circumstances around your assets and the loan as well as your credit profile when making their decision. This can include such factors as your plan for how you will use the finance, your exit or repayment strategy, property value, amount of equity or deposit and any other related experience with loans, as well as your other financial commitments and income.

So, while it’s very unlikely you’ll be refused a loan because of a low credit score, a lender may charge you a slightly higher rate of interest. If you want to find out more about your options for a bridging loan with a poor credit score or items of bad credit on your files, please get in touch with our team today. One of our expert advisors will be more than happy to answer your questions in a free initial consultation  and give you pointers for the next steps to take.

If you have a history of bad credit and need to apply for a bridging loan, then it’s highly likely you’ll need to take specialist advice. Although lenders of bridging loans tend to look differently at the security for their money – putting greater emphasis on your assets, equity and property – high street banks and providers are still quite risk-averse. If they are not willing to grant your borrowing, then you’ll need to look at options among specialist lenders, who will only take applications through trusted third parties like experienced brokers.

Whether you need a bridging loan to secure your next home ahead of the sale transaction of your current home, or for a development project or a business expansion, there are a number of things you can show or provide that will encourage the lender to give their approval. Principal among these are:

A decent-sized deposit or level of equity in your property. This will reduce the lender’s exposure to risk of default and also show your own commitment to the purchase or project.

A viable exit strategy. This is a key aspect to a bridging loan application – with the loan being comparatively short-term, the lender will be most concerned with your plan to repay the money, and for this to be as straightforward as possible. In the case of a house purchase, the exit strategy is usually the funds you receive from the sale of an existing property, which should cover the funds you need to borrow.

Previous property development experience. If you can show a record of having successfully achieved completion of new building projects and their sale, then this will give lenders much more confidence in your credit status.

A thorough project plan. In the case of the bridging loan being for a property development project, a complete, detailed analysis of every aspect of the project, including the projected timeline, allocations of resources and budgets, will go a long way to help your application.

A solid business plan. Similarly, if the loan is to fund improvements in your business ahead of other investments or to cover major outlay until funds from clients come through, then a detailed business plan with projections based on solid data will be of great benefit.

A key factor in achieving a successful response to your application is presenting your circumstances, plans and requirements in the most positive light. You’ll want to make sure it’s as easy as possible for the lender to make a decision in your favour, especially if you are applying with a history of bad credit.

If you have a history of bad credit and need to apply for a bridging loan, then it’s highly likely you’ll need to take specialist advice. Although lenders of bridging loans tend to look differently at the security for their money – putting greater emphasis on your assets, equity and property – high street banks and providers are still quite risk-averse. If they are not willing to grant your borrowing, then you’ll need to look at options among specialist lenders, who will only take applications through trusted third parties like experienced brokers.

Whether you need a bridging loan to secure your next home ahead of the sale transaction of your current home, or for a development project or a business expansion, there are a number of things you can show or provide that will encourage the lender to give their approval. Principal among these are:

A decent-sized deposit or level of equity in your property. This will reduce the lender’s exposure to risk of default and also show your own commitment to the purchase or project.

A viable exit strategy. This is a key aspect to a bridging loan application – with the loan being comparatively short-term, the lender will be most concerned with your plan to repay the money, and for this to be as straightforward as possible. In the case of a house purchase, the exit strategy is usually the funds you receive from the sale of an existing property, which should cover the funds you need to borrow.

Previous property development experience. If you can show a record of having successfully achieved completion of new building projects and their sale, then this will give lenders much more confidence in your credit status.

A thorough project plan. In the case of the bridging loan being for a property development project, a complete, detailed analysis of every aspect of the project, including the projected timeline, allocations of resources and budgets, will go a long way to help your application.

A solid business plan. Similarly, if the loan is to fund improvements in your business ahead of other investments or to cover major outlay until funds from clients come through, then a detailed business plan with projections based on solid data will be of great benefit.

A key factor in achieving a successful response to your application is presenting your circumstances, plans and requirements in the most positive light. You’ll want to make sure it’s as easy as possible for the lender to make a decision in your favour, especially if you are applying with a history of bad credit.

As expert brokers, we know what lenders are looking for in an application and can help you to package yours so that it gets the greatest chance of success. Get in touch with our team today and one of our advisors will let you know exactly how we could help in your case.