A mortgage may be the way in which a person is able to become a homeowner. In order to get a mortgage, the lender will check a person’s credit score. The credit rating that a person has may affect whether or not the lender will decide to offer them the loan. What’s more, it may be that those with a poor credit rating are not offered lower interest rates.
A lender doesn’t have to give you the interest rate they are advertising or that you see in best buy tables on comparison website
The Money Advice Service
The Money Advice Service website explains exactly what a poor credit rating can mean for you.
In addition to the possibility of being charged higher interest rates, it may mean that a person gets a smaller credit limit, or is rejected altogether.
“A lender doesn’t have to give you the interest rate they are advertising or that you see in best buy tables on comparison websites,” the website states.
Some lenders will determine rates on a “rate-for-risk” price system.
This means that the rate that a borrower is offered is dependent on the risk that the lender thinks they may represent when it comes to not paying the credit back on time.
The Money Advice Service also explains what the “representative APR” means when borrowers look at advertised loans.
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