Having bad credit makes getting a mortgage harder, but it does not necessarily make it impossible. This guide explains mortgages with bad credit: how lenders view adverse credit, what affects your chances, the role of specialist lenders, and the steps you can take to improve your prospects of approval.
It is possible but harder
A poor credit history does not automatically mean you cannot get a mortgage, but it does narrow your options and usually means higher rates and sometimes a larger deposit. Mainstream lenders may decline, but specialist lenders consider adverse credit, assessing cases on their merits, as our guide to credit scores and mortgages explains. So bad credit is an obstacle to plan around, not always a barrier.
Severity and recency matter
How much adverse credit affects you depends on its severity and how recent it is. Minor, older issues matter far less than serious, recent ones. Many lenders will accept one or two small defaults or county court judgments over the past couple of years, while more serious events like bankruptcy or an IVA may need to be several years in the past, often four to six, before lenders will consider you. Time and good conduct since matter greatly.
Types of adverse credit
Adverse credit covers a range of issues, from late or missed payments and defaults, through county court judgments, to more serious events like individual voluntary arrangements, debt management plans, repossessions and bankruptcy. Each is viewed differently, with missed payments least serious and bankruptcy most. Understanding what is on your record, and how lenders view each type, helps you know where you stand and which lenders might consider you.
Specialist lenders
Borrowers with adverse credit often use specialist or adverse-credit lenders, who consider cases mainstream lenders decline, in exchange for higher interest rates and sometimes a larger deposit requirement, as our guide to remortgaging with bad credit explains. These lenders price for the higher risk, so a bad-credit mortgage costs more, but it can provide a route to ownership, with the option to remortgage to a better deal later as your credit recovers.
How long issues stay
Most adverse credit stays on your credit file for six years from the date of the issue, after which it drops off, improving your record. As issues age and you build a history of good conduct, your prospects improve. So if your adverse credit is approaching the six-year mark, waiting a little, or at least understanding what will soon drop off, can meaningfully improve the deals available to you.
Improving your chances
You can improve your chances by saving a larger deposit, allowing time to pass since any issues, avoiding new credit problems, and ensuring your current finances are well managed, as our guide to deposits explains. Registering on the electoral roll, paying everything on time, and reducing other debts all help. A stronger overall profile reassures lenders despite past issues, widening your options and improving your rate.
Check your credit file
Before applying, check your credit file to see exactly what lenders will see, correct any errors, and understand your position. Knowing what is recorded lets you target suitable lenders and avoid wasted applications, each of which leaves a search on your file. A broker who specialises in adverse credit can then match you to a lender likely to accept you, which is often the most effective route to a bad-credit mortgage.
Late and missed payments
Late or missed payments on credit cards, loans or bills are among the milder forms of adverse credit, but they still appear on your file and can affect applications, especially if recent or frequent. A few isolated late payments are usually less of a problem than a pattern of them. Keeping all payments up to date from now on, and showing a recent clean record, helps offset older missed payments.
Defaults and county court judgments
Defaults (where an account is closed due to non-payment) and county court judgments (CCJs) are more serious, but many lenders will still consider one or two small, older ones, particularly if satisfied (paid off). The size, number, recency and whether they are settled all matter. Settling outstanding defaults and CCJs where you can, and letting time pass, improves how lenders view them and widens your options.
Bankruptcy, IVAs and debt plans
The most serious adverse events, bankruptcy, individual voluntary arrangements (IVAs), debt management plans and repossessions, have the biggest impact and usually need to be well in the past, often several years and sometimes four to six, before many lenders will consider you. Specialist lenders may help sooner, at higher cost. Understanding that these serious events take longer to move past helps set realistic expectations about when a mortgage may be possible.
The deposit and rate trade-off
With adverse credit, you should generally expect to need a larger deposit and to pay a higher interest rate, as lenders price for the higher risk, as our guide to loan-to-value explains. A bigger deposit reduces the lender's risk and can improve both your chances and your rate. So saving as much deposit as you can is one of the most effective ways to strengthen a bad-credit application.
Remortgaging to a better deal later
A bad-credit mortgage need not be permanent: as your credit recovers and adverse events age, you may be able to remortgage to a better, mainstream deal later, as our guide to remortgaging with bad credit explains. So an adverse-credit mortgage can be a stepping stone, getting you onto the ladder now with the prospect of improving your terms once your record has improved over time.
Rebuilding your credit
Alongside applying, actively rebuilding your credit improves your future options: register on the electoral roll, pay every bill and commitment on time, keep credit balances low, avoid new defaults, and check your file regularly for errors, as our guide to credit scores explains. Steady, responsible financial behaviour over time gradually repairs your record, opening up better mortgage deals and the chance to remortgage onto a mainstream rate later.
A realistic, hopeful picture
The honest picture is that bad credit makes a mortgage harder and dearer, but for most people it does not make ownership impossible. By understanding what is on your file, saving a good deposit, letting issues age, rebuilding your credit and using a specialist broker, you can often find a route to a mortgage now, and improve your terms later. Patience and good financial habits are powerful tools for adverse-credit borrowers.
If your credit is poor, do not assume a mortgage is out of reach: understand your file, save what you can, give problems time to age, and take specialist advice, and a realistic route to ownership often emerges, with better terms to follow as your record heals.
In short
Bad credit makes a mortgage harder but not always impossible. Lenders care about the severity and recency of issues: small, old problems matter less than serious, recent ones, and events like bankruptcy may need several years to pass. Specialist lenders consider adverse credit at higher rates and sometimes larger deposits. A bigger deposit, time, good conduct and checking your file all help, and a broker can match you to the right lender.
Where to get help and next steps
Read our guides to your credit score, remortgaging with bad credit, and how much deposit you need. This is general information, not mortgage or financial advice.