Having bad credit does not automatically mean you cannot get a mortgage. While it may narrow your options and affect the rates available to you, thousands of people with adverse credit histories successfully secure mortgages in the UK every year. The key is understanding how lenders assess credit issues, which specialist lenders may consider your application, and what steps you can take to strengthen your position. In this guide, we cover everything you need to know about getting a mortgage with bad credit, from understanding what counts as adverse credit to practical steps for improving your chances of approval.
What Counts as Bad Credit?
Bad credit includes anything from missed payments and defaults to CCJs, IVAs, and bankruptcy — essentially any negative marks on your credit file. Mortgage lenders do not use a single universal credit score; each lender has its own criteria and will weigh different types of credit issues differently. The most common types of adverse credit that can affect a mortgage application are:
- Late or missed payments: Falling behind on credit commitments such as credit cards, loans, or utility bills. Even one or two missed payments can affect your credit file.
- Defaults: When a lender formally closes an account after a sustained period of non-payment, typically after three to six missed payments. Read our detailed guide on getting a mortgage with defaults.
- County Court Judgements (CCJs): A court order issued when you fail to repay a debt. CCJs remain on your credit file for six years. Learn more in our guide to getting a mortgage with a CCJ.
- Individual Voluntary Arrangements (IVAs): A formal agreement with creditors to repay debts over a set period. See our guide on getting a mortgage with an IVA.
- Debt Management Plans (DMPs): An informal arrangement to repay debts at a reduced rate. Read about getting a mortgage with a DMP.
- Bankruptcy: A formal insolvency process that stays on your credit file for six years from the date of the order. Find out about getting a mortgage after bankruptcy.
- Repossessions: If a previous property was repossessed due to mortgage arrears.
- No credit history: Having little or no borrowing history can also make it harder to get approved, as lenders have no track record to assess.
Not all adverse credit is treated equally. A single late payment from four years ago is viewed very differently from a recent bankruptcy. The type, severity, recency, and whether the issue has been resolved all matter significantly when lenders assess your application.
How Do Mortgage Lenders Assess Bad Credit?
Lenders assess bad credit by looking at the type, severity, recency, and resolution status of each adverse event on your file, along with your deposit size. There is no single industry-wide rulebook — every lender has its own criteria. However, most consider the following factors when evaluating an application:
| Factor | What lenders look at | Impact on your application |
|---|---|---|
| Type of adverse credit | Missed payments, defaults, CCJs, IVAs, bankruptcy, repossession | More severe issues (bankruptcy, repossession) are harder to overcome than missed payments |
| Recency | How long ago the credit issue occurred | Older issues carry less weight — many lenders require 1–3 years since the last adverse event |
| Satisfied vs unsatisfied | Whether debts have been paid off or are still outstanding | Satisfied debts are viewed far more favourably — some lenders require all debts to be settled |
| Amount | The total value of adverse credit entries | Smaller amounts (under £500) are generally easier to work with than larger debts |
| Frequency | Whether it was a one-off event or a pattern | Isolated incidents are more easily explained than repeated issues |
| Deposit size | How much equity or deposit you have | A larger deposit reduces lender risk and opens more options, even with bad credit |
Lenders pull your credit file from one or more of the three main UK credit reference agencies: Experian, Equifax, and TransUnion. Each agency may hold slightly different information, so it is worth checking all three before you apply. You can access your statutory credit reports for free.
Lenders must carry out a thorough assessment of affordability before offering a mortgage, taking into account both the borrower’s credit history and their ability to meet repayments now and in the future.
Which lenders offer mortgages to people with bad credit?
Specialist adverse credit lenders are the main option for borrowers with bad credit, as high street banks tend to decline applicants with certain types of adverse credit automatically. These specialist lenders use manual underwriting rather than purely automated credit scoring, which means a real person reviews your application and considers your individual circumstances.
Specialist lenders typically accept applications from borrowers with a wide range of credit issues, including:
- Missed payments and late payments
- Satisfied and unsatisfied defaults
- Satisfied CCJs (and in some cases, unsatisfied CCJs under a certain value)
- Completed IVAs and debt management plans
- Discharged bankruptcies (typically at least one year post-discharge)
- Payday loan usage
- Low credit scores or thin credit files
The trade-off is that specialist lenders generally charge higher interest rates to reflect the increased risk. However, they provide a vital route onto the property ladder or into homeownership for people who would otherwise be unable to secure a mortgage.
Specialist bad credit mortgage lenders are typically only accessible through mortgage brokers — they do not deal directly with the public. Working with a broker who has access to the whole of the market, including specialist and sub-prime lenders, is essential if you have adverse credit.
How do different types of bad credit affect your mortgage options?
Not all adverse credit is treated the same way — late payments have far less impact than bankruptcy, and satisfied debts are viewed much more favourably than outstanding ones. Here is how lenders typically view each type, from least to most severe:
- 01
Late payments (least severe)
One or two missed payments, especially if they occurred more than 12 months ago, are generally the easiest to overcome. Many mainstream lenders will still consider your application if late payments are isolated and explained.
- 02
Defaults
Defaults are more serious than late payments but can often be worked with, particularly if they are satisfied (paid) and more than two years old. Specialist lenders routinely accept applications with defaults.
- 03
CCJs
County Court Judgements carry more weight than defaults. Satisfied CCJs over 12–24 months old are workable with specialist lenders. Unsatisfied CCJs are harder but not impossible, especially if the amounts are small.
- 04
Debt Management Plans
Being on or having completed a DMP shows you took steps to manage your debt. Some specialist lenders will consider applications from borrowers who have completed a DMP, or even those still on one in certain cases.
- 05
IVAs
An IVA is a formal insolvency event and is taken seriously by lenders. Most will require the IVA to be completed and at least 12 months to have passed. Larger deposits are usually needed.
- 06
Bankruptcy (most severe)
Bankruptcy is the most significant adverse credit event. Most lenders require at least one year since discharge, with some requiring three or more years. Higher deposits (typically 15–25%) are expected.
What interest rates and deposit will you need with bad credit?
You will typically need a deposit of at least 15% and should expect interest rates 1–4% higher than standard mortgage products. The exact rates and deposit requirements vary significantly depending on the type and severity of your credit issues, your deposit size, and the lender you use.
| Credit situation | Typical deposit needed | Indicative rate range |
|---|---|---|
| Clean credit | 5–10% | 4.5–5.5% |
| Minor adverse (late payments) | 10–15% | 5.0–6.5% |
| Defaults (satisfied, 2+ years) | 15–20% | 5.5–7.5% |
| CCJs (satisfied, 1+ year) | 15–25% | 6.0–8.0% |
| IVA (completed, 1+ year) | 15–25% | 6.5–8.5% |
| Bankruptcy (discharged, 1+ year) | 15–25% | 7.0–9.0% |
These are indicative ranges and will vary based on your individual circumstances, the loan amount, the property, and the specific lender. A larger deposit significantly improves your options — if you can put down 25% or more, you may access rates much closer to mainstream products, even with adverse credit on your file.
It is also worth noting that a bad credit mortgage does not have to be permanent. Many borrowers take a specialist mortgage initially and then remortgage to a more competitive deal after two to three years, once their credit file has improved. Use our mortgage calculator to estimate monthly repayments based on different rate scenarios.
Think of a specialist mortgage as a stepping stone, not a life sentence. Take the deal you can get now, keep your repayments up to date, and plan to remortgage onto a better rate once your credit position improves — typically after two to three years.
How can you improve your chances of getting a mortgage with bad credit?
The most effective steps are satisfying outstanding debts, saving a larger deposit, and using a specialist broker who knows which lenders will accept your profile. While you cannot change your credit history overnight, these practical actions can significantly strengthen your position:
- 01
Check your credit reports thoroughly
Obtain your full credit file from all three UK credit reference agencies — Experian, Equifax, and TransUnion. Check for errors, outdated entries, or accounts you do not recognise. Dispute any inaccuracies, as correcting mistakes could improve your position.
- 02
Register on the electoral roll
This is one of the simplest and most effective steps you can take. Being on the electoral roll helps lenders verify your identity and address, and improves your credit score.
- 03
Satisfy outstanding debts where possible
If you have unsatisfied defaults, CCJs, or other outstanding debts, paying them off (satisfying them) significantly improves how lenders view your application. Even if the mark remains on your file, the fact that it is satisfied makes a substantial difference.
- 04
Save a larger deposit
The more you can put down, the lower the loan-to-value ratio, and the more willing lenders will be to offer you a mortgage. Aim for at least 15% if you have minor adverse credit, or 20–25% for more serious issues.
- 05
Avoid new credit applications
Each hard credit search leaves a footprint on your file. Multiple applications in a short period can signal financial distress to lenders. Stop applying for credit in the months before your mortgage application.
- 06
Use a specialist mortgage broker
A broker experienced in adverse credit mortgages will know which lenders are most likely to accept your application. They can present your case in the best possible light and avoid wasting applications on lenders who would decline.
How do you apply for a mortgage with bad credit?
The process typically takes four to eight weeks from initial enquiry to mortgage offer and follows a similar structure to a standard application, with the key difference being specialist lender matching and manual underwriting. A specialist broker will typically guide you through the following steps:
- Initial assessment: Your broker will review your credit file, income, and overall financial situation to understand your options. This initial conversation usually involves a soft credit check which does not affect your credit score.
- Lender matching: Based on your specific credit history, the broker will identify which specialist lenders are most likely to accept your application. Different lenders have different criteria, so this step is crucial.
- Agreement in Principle (AIP): Once a suitable lender is identified, you can obtain an Agreement in Principle, confirming the lender is likely to offer you a mortgage subject to a full application and property valuation.
- Full application: You submit your full application with supporting documents including proof of income, bank statements, and identification. The lender will conduct a hard credit search at this stage.
- Underwriting: A specialist underwriter reviews your application, taking into account your credit history and any explanations you have provided. This is where manual underwriting is particularly valuable for adverse credit cases.
- Mortgage offer: If approved, the lender issues a formal mortgage offer, and you can proceed with your property purchase or remortgage.
The process typically takes four to eight weeks from initial enquiry to mortgage offer, though this can vary depending on the complexity of your case and the lender's processing times.
What are the biggest myths about bad credit mortgages?
Many people wrongly believe bad credit means they can never get a mortgage, but that is simply not the case. Here are the most common myths and the reality behind them:
- “I will never get a mortgage with bad credit”: This is simply not true. The specialist lending market exists specifically to serve borrowers with adverse credit. Your options may be more limited and rates higher, but approval is often possible.
- “I need to wait six years for marks to drop off”: While most adverse credit entries do remain on your file for six years, you do not necessarily need to wait that long. Many specialist lenders will consider applications within months of a credit event, depending on the type and severity.
- “All lenders see the same credit score”: Each credit reference agency calculates scores differently, and lenders use their own internal scoring models. Being declined by one lender does not mean all will decline you.
- “Checking my credit file will damage my score”: Checking your own credit report is recorded as a soft search and has no impact on your credit score. You should check regularly.
What is the first step to getting a mortgage with bad credit?
The best first step is to speak with a specialist mortgage broker who understands the adverse credit lending market. They can assess your situation, explain your options honestly, and guide you through the application process with the lender most likely to approve your case.
You can get started by completing our short online mortgage enquiry. It takes just a few minutes, there is no obligation, and your initial enquiry will not affect your credit score. We will match you with an FCA-regulated adviser who specialises in adverse credit mortgages.
If you are unsure about your credit situation, you can also use our affordability calculator to get an idea of how much you might be able to borrow based on your income.
If you are also self employed, your mortgage application involves additional considerations around income verification. Read our guide to self employed mortgages for advice on navigating both challenges together.
- Bad credit does not automatically disqualify you from getting a mortgage — specialist lenders exist for this purpose.
- The type, severity, recency, and resolution of credit issues all affect your options and the rates available.
- Specialist lenders use manual underwriting and consider individual circumstances, not just credit scores.
- A larger deposit (15–25%) significantly improves your chances and the rates you can access.
- Work with a specialist broker who knows the adverse credit market — they can match you to the right lender first time.
- Consider a specialist mortgage as a stepping stone — remortgage to a better rate once your credit improves.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Think carefully before securing other debts against your home.