When it comes to your credit rating, clearly negative equity is not an advantage. Never. From whatever angle one views it, there are no plus points for being in possession of a property on which the amount owed is greater than its current market value.
So just how big a hindrance might negative equity be to your credit rating and where there is such a handicap, (a) are there solutions and, (b) if there are, what are they?
Let’s call a spade a spade; lenders – banks and building societies – are in the business of making money.
They do so from borrowers who repay more than was loaned to them, ideally both on time and in full. That is how the system works.
But every loan carries with it an element of risk. That, too, is a fact of life.
Borrowers seek to minimise such risk to themselves by lending to those they believe to be capable of making repayments.
In deciding who qualifies as ‘a low risk borrower’, lenders base their assessment on a credit report. This is an all-important examination of the would-be borrower’s incoming, outgoings and credentials – from the same Latin root as ‘credit’, of course.
The credit report explores your track record, examining your past performance in terms of honouring previous financial undertakings and commitments. The better your history in this respect, the more heavily this weighs in your favour.
While this system is not complex, the conclusions to which it leads are crucial in determining what lies ahead for those under the potential lender’s microscope.
Lenders analyse such credit reports closely, allocating points en route to a decision on the likelihood of the applicant either honouring or defaulting on a credit agreement.
The higher the score, the better the prospects for those hoping to borrow. They have improved options as a result of having more choice. And, vitally, they tend to qualify for cheaper credit, too.
Your credit score is seen as providing a good overall measure of your credit standing. The better your standing, the more enhanced your prospects of getting a keenly priced loan.
Conversely, the poorer your standing…. well, let’s just say there’s a real ring of truth to the old adage that beggars can’t be choosers.
Put bluntly, your present and your future depend very much on your past. Now, you can’t undo your past. But while it’s true that no-one gets to re-write history, it is equally the case that history’s influence on our future can be managed.
In the circumstances, it makes total sense to consult with those who know how the system works and who, by virtue of that knowledge, are best able to protect and project all your credit rating plus points whist simultaneously minimising anything which might undermine your cause or detract from your position when it comes to any future financial contracts or undertakings, be they mortgages or loans for any other purpose.
Remember, safeguarding your credit rating as far as that can be done is all-important at this stage. That is particularly true of anyone living with negative equity. And there are many thousands of them in Northern Ireland.
Negative equity is an unfortunate reality for which few, if any, of those suffering from it are responsible. It is not something any of them chose, for which reason they are victims, not perpetrators. Not only do they require help – they deserve it.
If you are one of the thousands in Northern Ireland dealing with negative equity, get in touch with a member of the team today for help!