Getting a mortgage with bad credit rating - how hard will it be?

OnlyWayIsUp

Are there any mortgage brokers/financial advisors that specialise or can assist or advise in getting a mortgage for a married couple with a bad credit rating?

The mortgage we would be looking for would only be about x2 our combined annual income repaying over a period of 20 years. We won’t qualify for any Govt assisted schemes.

The bad credit rating is bad… but it’s from a long standing issue from a different life that took this long to sort out.

Are there any realistic options out there, or banks that will work with us, or is it a case of waiting for 5/5 years for credit rating to reset and go for it again?

Basically, are there any forgiving banks out there?

Jim2007

To start with there is no such thing as a credit rating, there is a credit history, which is maintained by the Central Bank, know as the Central Credit Register (CCR). By law all financial institutions are required to report client debt issues, without exception and the bad news for you is that those reports remain on your record until the debt is settled. So it makes no difference how long you wait, the debt will not go away until you deal with it.

I suggest you start by ordering a copy of your report from the CCR to see exactly what is on it. And then you come up with a plan to deal with the items on the list. And no bank is going to give a mortgage to some one a bad credit report, there are plenty of people out there seek mortgages and credit so there is not need to.

walterking

Bank of Ireland are known to look more at the present and future than dwell too much on the past if you can show excellent payment probability.

However, it will depend on how you handled the situation when things went bad - if you stuck your head in the sand and had to be coerced into sorting out the issue, it will be a no go. If you can show you made efforts and always responded and were always willing to do your best, its a positive in their book.

They may also say no for now, but give you a path to go along for the next 12 months

Henry Ford III

Demand for mortgages is strong and therefore lenders won't want to compromise their underwriting conditions and therefore safeguard the quality of their loan books.

As Jim 2007 rightly said cleaning up your borrowing record should be your top priority OP.

walterking

https://www.boards.ie/discussion/comment/120103968#Comment_120103968

Exactly, but Bank of Ireland will have an underwriter look at an individual case whereas for others it's a case of "computer says no"

So it's worth talking to them and even if they reject it, they will tell you how to overturn that in 12 months

https://www.boards.ie/discussion/comment/120098102#Comment_120098102

That’s not actually true. No lender will keep a debt active forever. Eventually they will write off the debt and/or close the account associated. Once that happens it will be removed from the CCR after 5 years, this is even on their website.

amdublin

Very hard, near to impossible. It is (sometimes) hard to get one with a good credit history at the end of the day.

Jim2007

https://www.boards.ie/discussion/comment/120105201#Comment_120105201

Once a debt has been settled as opposed to being written of it can be removed. The reporting requirement allows creditors to use it as leverage to collect or factor debts. The chances of having your credit report cleaned without making an effort to do so are extremely slime. And of little use to people needing credit facilities.

OnlyWayIsUp

Thanks everyone for your comments, all appreciated.

Maybe a bit more info… I’m not looking for a mortgage now cos I know I won’t get one but I want to know what I can do now to speed up how quickly I can get one.

I am debt free. I have no personal debt. However, I was a party to a property that was sold as a distressed property and I did a deal on the residual debt. We’re talking very significant amounts of money. It took years and years to sort for various reasons but I no longer am a party to the property and all the residual debt has now been cancelled… thus I’m debt free (but have a shocking credit rating) which in 5 years will be back to normal (I think?). The mortgage account is closed and the debt is written off.

Both myself and wife have full time permanent and pensionable jobs and our combined income would be considered very high.

So, I’m wondering what kind of timeframe might it take before a bank will seriously consider us? As previously stated we would be looking to try and get a mortgage of approx twice our combined incomes over a period of 20 years and we would hope to get it in next 2-3 years. Is that possible?

Affordability is not an issue… though banks won’t think that due to what’s happened previously.

https://www.boards.ie/discussion/comment/120105974#Comment_120105974

It literally says on the website

When a loan has been closed (where all payments have been discharged, or the loan closed off or written off by the lender), the information will be completely removed from the credit report five years after the last payment was made.

Mrs OBumble

https://www.boards.ie/discussion/comment/120105201#Comment_120105201

Lenders usually eventually sell bad debts to companies which specialise in debt collection. The latter will keep things open for a very long time.

https://www.boards.ie/discussion/comment/120106576#Comment_120106576

No they won’t. When a debt is sold to a debt collection company the bank writes it off at that point. They’ve sold it for a fraction of its value and they have no prospect of being paid.

Debt collectors do NOT report to the CCR and are of no relevance. They’re also effectively powerless in this country but that’s another matter.

Jim2007

https://www.boards.ie/discussion/comment/120106812#Comment_120106812

What is your actual involvement in debt collection, before this goes any further? And in particular debt factoring in the past few years.

Jim2007

https://www.boards.ie/discussion/comment/120105990#Comment_120105990

Like I already said, get the CCR reports for both you and your wife and see what they actually say. In the past we have had people discover old debts they had forgotten about being reported, debts that were settled but still being reported and so on. If there are errors the earlier you address them the better as the longer you leave it the more likely the people involved will have moved on and the more difficult it will be. From there you will be able to figure out how soon your report will be clean. They have a very good FAQ there so you should be good to go.

https://www.boards.ie/discussion/comment/120106924#Comment_120106924

I’d rather you just saved us all a bunch of back and forth and showed me or point me to the direction of something that shows private debt collectors (of which the majority just operate out of solicitors offices.. and seem to send warning letters from those same solicitors) are capable of reporting to the CCR?

I’ve checked since you first said I was wrong, extensively and there’s no evidence to suggest that at all. Even the debt collectors themselves make no mention of the CCR, but interestingly the banks and even money lenders such as Humm, make it abundantly clear they DO check the CCR & DO report loan progress.

Furthermore in order to report to the CCR the lender requires your personal details, notably your PPSN number. Do you seriously think owing the bank money means they can divulge your personal data such as your PPSN in order to allow a debt collector to report to CCR? I doubt it personally. They’re free to write off and sell the debt as I said already and sell that debt to a collector. Along with that they will pass along the bare minimum of information they need to make contact with you.

What they certainly won’t get away with doing is giving out unreasonable amounts of personal information such as your work address, work phone number, PPSN. Maybe they should give a copy of your passport so they can identify you on the street too?

You can come back and forth to me all day about this. Either show me evidence debt collectors in Ireland have any power or authority to enforce payment (by the way if they do claim that you can ring the Gardaí) or that they’re authorised or supervised by the Central Bank & therefore have access to the CCR.

https://www.citizensinformation.ie/en/money_and_tax/personal_finance/debt/debt_collection.html#lc0b34

A Debt Collector will eventually seek repayment from the estate upon the death of a debtor. The debtor may no longer be burdened with their status as a debtor per se but the loved ones they leave behind will lose out a portion, or all of the estate.

Separate point entirely from where they can report to CCR.

https://www.centralcreditregister.ie/lender-area/

In theory any entity (organisation or individual) can apply to be a credit information provider. If accepted and placed on register then if one complies with the regulations, it could be theoretically possible for a debt collector to notify the CCR

https://www.boards.ie/discussion/comment/120108602#Comment_120108602

Not the case either. You can only apply if you meet criteria set out in the lender FAQ’s.

RoboRat

Have you considered a guarantor? This would give the bank some security and they may consider the mortgage.

https://www.boards.ie/discussion/comment/120108763#Comment_120108763

A very big ask of a guarantor which would be a very serious matter, would need to be somebody awash with assets who would be prepared to lose a considerable amount.

Mrs OBumble

https://www.boards.ie/discussion/comment/120107486#Comment_120107486

You haven't got a clue what you are talking about.

Start here: https://www.peppergroup.ie/loans/residential-mortgages/charges-warnings

Feel free to check the websites of Cabot et al yourself. I'm 100% certain they will have similar, and that they report.

https://www.boards.ie/discussion/comment/120108855#Comment_120108855

Right and they’re private debt collectors are they?

Because it looks to me like they buy mortgages and similar high value loans. I am saying that when small loans, credit cards and debts that are not going to be chased to the ends of the earth such as a mortgage to be paid will eventually be sold for a fraction of what they’re worth, to a private debt collector such as Intrum.

There are separate rules for how the likes of Intrum can interact with the debtor, but what they cannot do is report to the CCR. They simply do not have the authority or even the details to do this. They’re outside the scope of what the CCR is for. When a debit is written off by a bank and sold to Intrum it will stop being reported and 5 years after that date it will no longer be on your CCR record.

A mortgage which has been bought by a second charge lender like Pepper there is an expectation the payments will be made regularly and the entire mortgage is paid if that doesn’t happen they will look for the collateral. This process is entirely different from what I’m describing and what I’m sure the OP is describing which is a credit card or small loan defaulting.

I don’t think anyone is stupid enough to think they have any hope in hell of getting a mortgage if they’ve previously defaulted on an existing mortgage. Huge difference between a few hundred on a credit card or overdraft than 200k mortgage not paid. You’d be daft to even ask the question the bank would laugh at you. so clearly it’s not me who doesn’t know what I’m talking about, it is you that doesn’t understand what I’m talking about.

walterking

I still say to the op to talk to Bank of Ireland and see what they say.

Unlikely to get a mortgage immediately, but if the op can show that they tried their best and has a recent clean record, bank of Ireland will map out a path for them.

Btw, I don't have an account with BOI but I made the same suggestion to a similar case over two years ago and they got their mortgage after about 15 months.

You have absolutely nothing to lose and everything to gain by calling into them

Mrs OBumble

https://www.boards.ie/discussion/comment/120108869#Comment_120108869

Not gonna waste my breath arguing.

Will just say that any entity which is managing loan-originating debts over €500 is REQUIRED to report to the CCR. Its not a choice.

I'm not sure when utility bill debts sure going to be added, but that will come, too.

https://www.boards.ie/discussion/comment/120109242#Comment_120109242

🙄

If you think only utility bill companies use private debt collectors & that banks don’t write off small debts just like they do and employ the use of them you’re wasting your breath indeed.

they’re obliged to report loans and credit facilities over €500. That’s where your mistake is debts do not have to be reported. If there’s no payment made there’s nothing to report. When the account is closed there’s nothing else to report. I’m not sure what part of that you find so hard to understand?

You could give up on the back and forth here and go and contact the CCR they’ll clarify it for you themselves.

edit:

just realised as well that you must think if what you’re claiming is true, that banks have the interest, resources or facilities to report, every month, non payment on a default credit. If the bank records non payment with arrears on Jan 1st 2023 then closes the account the next day, in 2028 the most recent (Jan 23) recording would be removed.

there would be no report in Feb because the account was closed and activity ceased entirely. The debt sold to a collection agent and the bank washes their hands of it.

Mrs OBumble

Banks don't close accounts. They sell the debts on.

See this, for example: https://www.independent.ie/business/personal-finance/kbc-bank-ireland-reaches-agreement-to-sell-11bn-of-non-performing-loans-40800716.html

Notice the part about "a small number of non-mortgage non-performing loans".

CarVal as the purchaser are required to report monthly on the status of those particular debts. They make sure they have the time as resources, as part of the deal.

OnlyWayIsUp

Thanks for this @walterking This is precisely the info I’m looking for. The mortgage I took out was a long time ago but has only recently been sorted so although I’ve been working all along with the banks etc… to sort this it has taken this long to be sorted.

In the meantime, both my earnings and my wife’s have risen exponentially and we are in a completely different financial position now as to all the crap that happened 15 years ago but will continue to affect us for another 5 years with the credit rating.

for other posters, it was not a private debt collection that took over the mortgage but another financial institution that reports to the Irish Credit Bureau.

I will deffo take the advice of Jim who says to go to the Bureau and make sure there isn’t anything else hiding there and after that I’ll probably wait a while before contacting a bank.

But my initial query remains… if there are any mortgage brokers that specialise in helping people with rock bottom credit ratings from stuff that started 15 years ago but who can now prove they have the financial ability to afford a mortgage then please let me know!

We are hardly expecting the Viper to be an accredited debt collection agent in regard to CCR 😂

Mrs OBumble

The Irish Credit Bureau is largely irrelevant now.

It is a private company, set up on a membership basis by some financial institutions. Those financial institutions which are members may chose to report debts to it. But there's no legal requirement, and there's lots of debts they didn't know about.

The Central Credit Register is a reporting organisation set up by the government. There are laws saying who has to report, what they have to report - and big fines if companies get it wrong. Companies offering loans to are also required to check people's record on the CCR in some circumstances.

As for the Viper: since he operates in this country, he may have a legal requirement to report. He may or may not obeying this law. But he is up to date with his reports to the CRO (see here: https://www.vision-net.ie/Company-Info/Viper-Debt-Recovery-And-Repossession-Services-Limited-394330 ). You may be surprised how may "shadow" operators make sure they comply with the administrative laws, so there aren't easy ways for officialdom to shut them down.

..

Just goes to show how informed you are Mrs. O Bumble. The ICB completely ceased operations in 2021. The data base they held has been wiped and no reports can be made or accessed.

im out. Believe what you want. If you think banks continue to report indefinitely a non performing loan or credit card then that’s nice.

walterking

https://www.boards.ie/discussion/comment/120109915#Comment_120109915

The issue is most brokers work primarily on commission, so would have little interest in this.

Look for a fee based financial advisor near to where you are. Here's an example (plucked from Google) https://lifestylefinancialplanners.ie/about/fee-based-advice/

But I'd also talk to Bank of Irish mortgage advisor as currently they are the only bank that are willing to look at the current and recent history and give allowances if a previous history can be explained and they will also give you a path to follow if they deem you not ready yet.

Q&A

https://www.boards.ie/discussion/comment/120111058#Comment_120111058

The bank will sell a loan and write off it's interest but that's from it's perspective. The fact it is sold means the loan purchaser is taking over the ownership of that interest. So there is a difference. In general the purchaser of the loan is covered by the CCR.

https://www.centralcreditregister.ie/borrower-area/faqs/

What lenders are included?

.....

Firms that have acquired loan books from Irish financial institutions

https://www.boards.ie/discussion/comment/120111152#Comment_120111152

Yes— high value loans are sold to the likes of Pepper who will seek payment on similar terms to the bank.

However if you default on your credit card, it’s more likely AIB, BOI, Avant will sell that onto Intrum or a crowd such as them who’ll just bug you for a while but can’t actually submit payment records to the CCR.

So if I get my defaulted credit card sold to Intrum on Feb 1st that’s the last time it will be recorded on the CCR. Jan 31st 2028 it won’t be there anymore. the bank doesn’t keep recording until the end of time.

I think my assumption this is the sort of bad credit the OP is talking about rarher than they defaulted on a massive loan or mortgage and are asking about the chances of a mortgage is more than fair here. I think no one would be stupid enough to wonder if they could get a mortgage when they failed to pay a previous one.

In any case I think the OP mentioned they have had considerable, high scale debt, not merely several hundred on a credit card.

OnlyWayIsUp

https://www.boards.ie/discussion/comment/120111307#Comment_120111307

Correct. We’re talking very high scale debt here. An utter mess of a situation but officially sorted now.

https://www.boards.ie/discussion/comment/120111372#Comment_120111372

If by sorted you mean it was paid then what I would suggest is if you don’t already have a copy of the CCR report, get one (it’s free) and make an appointment to speak with a mortgage advisor in your local branch.

Then you can sit with them, go through the report and they’ll fairly quickly and easily give you a clue if you have any hope here. Making applications you haven’t a hope of approval on is not a great idea generally as each time your report is viewed by a lender it leaves a footprint.

AlainaBarrera

Just stumbled upon your post and thought I could share some thoughts. There are actually financial advisors or mortgage brokers who specialise in helping individuals with low credit scores secure a mortgage. While mainstream lenders might be more reluctant to offer a mortgage with a bad credit history, you could explore alternative providers like specialist lenders.

https://www.boards.ie/discussion/comment/120739749#Comment_120739749

Fair advice but worth adding to

1. never pay a deposit or anything of that nature in order to get a loan from anyone (scam)
2. make sure that they are a registered and approved lender with the Central Bank!

super important to keep that in mind when stepping outside the usual lenders (AIB, BOI, PTSB, Avant)

crusd

I wonder how the OP got on and also could they secure a mortgage in the wife's name only if they were not party to the original issue?

Q&A

https://www.boards.ie/discussion/comment/120739888#Comment_120739888

Highly unlikely that a lender would give a mortgage to the wife without assessing the husband. Being married entitles a spouse to certain rights to the family home not to mention family finances. The home is collateral for the lender and are not going to advance money without knowing the full state of play of interested parties.

crusd

https://www.boards.ie/discussion/comment/120743084#Comment_120743084

I know of situations where due to certain preexisting conditions a spouse could not get life cover. The other spouse was then able to get the mortgage on their own.

In the case of a mortgage the spouse would only have rights over the equity in the house. The banks interests would not be impacted. If the spouse qualifies for a mortgage on their own there should be no additional risk to the bank.

Jim2007

https://www.boards.ie/discussion/comment/120743255#Comment_120743255

I have not seen any Irish models, but certainly in the banks I have been associated with I have seen it included in the model. Expecting a spouse to pay you over helping their spouse and family is too big an ask.

Q&A

https://www.boards.ie/discussion/comment/120743255#Comment_120743255

But in this case the spouse was assessed as part of the original application, they weren't ignored. The legal implications of marriage make it very difficult to assess an individual on their own. Just look at how complicated divorce can be.

Also, I would think a lender may take a very different view on:

A) the failure to get to get life cover, and

B) a track record of not paying back a loan.

manniot2

Hoping someone might have some thoughts on our situation.

We purchased a couch from DFS in 2018 and we apparently missed one instalment payment (bounced back or something) in 2019. It was for 140e. We never knew anything about it as the lender had an incorrect address for us so we never received any correspondence. They subsequently wrote off the 140e and reported it to the credit register. Again we knew nothing about this until today when our mortgage broker said there was an adverse finding on our credit history.

Are we likely to be able to get a mortgage?

Jim2007

You are working with a broker, who is in a far better position to advise you on this as they have access to all your financial information and are in a far better position to advise you on this, what do they say?

My advice would be to to contact the lender and sort the matter out, even with interest and penalties it can't come to more than a couple of hundred Euro and honestly if you cannot come up with the cash to settle that, who can you convince any lender that you will have access to sufficient funds to clear a mortgage???

A bank does not have limitless lending capacity and a loan officer has to sign off on your application, it's their job and their career, salary and bonuses depends on the decision they make. And they are not likely to take a chance of you if there are other more reliable candidates looking for a loan.

At the moment, your report is telling a potential lender:

• I don't stick to the lending agreements I sign up to
• I don't follow up on my debts and settle them
• And your excuse tells them you don't control and manage your financial affairs

You might get a loan if you get a loan officer on a good day, but I would not bet on it...

OnlyWayIsUp

https://www.boards.ie/discussion/comment/120739888#Comment_120739888

We’ve still not applied for a mortgage but will start talking to folk very soon. Will deffo reach out to BoI for a chat with one of their brokers.

@AlainaBarrera - You mentioned specialist mortgage/financial advisors r that specialise in such situations? If you could provide details of who does offer such services it would be much appreciated.

We have been previously advised that my wife won’t get a mortgage on her own, because married she’d have to be jointly assessed with me.

i got my credit report and there’s nothing else on it bar this absolute mess. I have no personal debt.

We have a deposit saved and we have a high income coming in between us, we just need a bank to look more forwards than backwards.

Any further advice appreciated.

Squiggle

https://www.boards.ie/discussion/comment/120106812#Comment_120106812

Cabot Financial do report to the CCR and do litigate. I've even seen them continue to chase debts after litigation has been successfully defended against !

Busymum33

https://www.boards.ie/discussion/comment/121585327#Comment_121585327

Hi, myself and my husband found ourselves in a similar situation. I had checked both our credit reports in 2019 (ICB) and nothing showed up but when I looked for the credit report from CCR in 2023 an old debt from 2008 came up on my husbands. Not a couple of hundred!

I was able to get a mortgage offer from AIB on my own but my husband was basically shown as a dependent and I didn't get anything near what I would have if we weren't married!

Now we are trying to just pay that debt off but the company offered a settlement rather than to pay in full and I am wondering if that would look bad on the CCR when applying for a mortgage?

Can you tell me how you got on for a finish? I really don't want to have to wait 5 years for to buy a house!

ELM327

We don't have "credit ratings" in ireland. We have a shared database where lenders are obliged to record and maintain records of loans of 500E and above. Prospective lenders can then review said database when further credit is being requested.

@Busymum33 short of clearing the loan (or making an arrangement where the lender marks the register as cleared, this is the key part)there's nothing you can do. Even at that, it will show as delinquent and cleared on the record so may impact your ability to get credit for the 5 years period anyway.