If you are planning your application route from agreement in principle to lender decision, use the Mortgage Application Hub as your central checklist.
Having bad credit does not automatically prevent you from getting a mortgage. It does make the process harder, more expensive, and requires careful planning. Here is a realistic guide.
Read more: See our Credit Scores guide for a complete overview of this topic.
Read more: See our First Time Buyers guide for a complete overview of this topic.
What Counts as Bad Credit for Mortgage Lenders?
| Issue | Severity | Impact on mortgage |
|---|---|---|
| Missed payment (1 or 2) | Mild | Some mainstream lenders will still consider, especially if 2+ years ago |
| Multiple missed payments | Moderate | Limits options to specialist lenders |
| Default | Moderate–Severe | Registered on credit file, limits options, deposit requirements higher |
| CCJ (County Court Judgment) | Severe | Most mainstream lenders decline; specialist lenders may accept |
| IVA (Individual Voluntary Arrangement) | Severe | Very limited options — specialist lenders only |
| Debt Management Plan (DMP) | Moderate | Some lenders accept if settled, others decline |
| Bankruptcy (discharged) | Very severe | Minimum 1–3 years after discharge, specialist lenders only |
| Repossession | Very severe | Most difficult — very few lenders will consider within 6 years |
| No credit history | Low | Not bad credit, but “thin file” — can still be problematic |
| High credit utilisation | Mild | Using over 50% of available credit reduces your score |
| Payday loans (recent) | Moderate–Severe | Many lenders auto-decline if payday loans within 3–6 years |
How Lenders Assess Bad Credit
Lenders look at a combination of factors:
| Factor | What they check |
|---|---|
| Recency | How long ago was the issue? 6 months ago vs 5 years ago |
| Severity | A single missed payment vs multiple defaults and a CCJ |
| Frequency | One-off or pattern of problems? |
| Amount | A £50 default vs a £10,000 CCJ |
| Satisfied or unsatisfied | Have you paid the debt off or is it still outstanding? |
| Current behaviour | Have your finances improved since the issues? |
| Deposit size | Larger deposits reduce lender risk and open more doors |
| Income stability | Secure employment vs unstable income |
Your Options — By Type of Bad Credit
Missed Payments
| Detail | Information |
|---|---|
| How many lenders? | Many mainstream lenders accept 1–2 missed payments if 2+ years ago |
| Deposit needed | 10%–15% typically |
| Rate premium | 0.2%–0.5% above best rates |
| Best approach | Wait until 2 years from the missed payment if possible |
Defaults
| Detail | Information |
|---|---|
| Registered default | Stays on file for 6 years from date of default |
| Satisfied vs unsatisfied | Satisfied defaults are viewed more favourably — pay them off if possible |
| How many lenders? | Some mainstream lenders accept small, old, satisfied defaults; larger or recent defaults need specialist lenders |
| Deposit needed | 15%–25% |
| Rate premium | 0.5%–2.0% above best rates |
CCJs (County Court Judgments)
| Detail | Information |
|---|---|
| On file | 6 years from date of judgment |
| Satisfied vs unsatisfied | Satisfied = significantly better options |
| Under £500 | Some specialist lenders are more flexible |
| Over £500 | Fewer options — deposit and income must be strong |
| Deposit needed | 15%–25% |
| Rate premium | 1.0%–3.0% above best rates |
IVAs (Individual Voluntary Arrangements)
| Detail | Information |
|---|---|
| During IVA | Cannot take on new credit — mortgage not possible |
| IVA completed and certificate received | Some specialist lenders will consider |
| Deposit needed | 20%–25% minimum |
| Rate premium | 2.0%–4.0% above best rates |
| Waiting period | Most lenders want 1–3 years after IVA completion |
Bankruptcy
| Detail | Information |
|---|---|
| During bankruptcy | Cannot take on new credit |
| After discharge (usually 12 months) | Very few lenders — specialist only |
| 3+ years after discharge | More options open up |
| 6+ years after discharge | Falls off credit file — mainstream options return |
| Deposit needed | 25%+ |
| Rate premium | 2.0%–5.0% above best rates |
How to Improve Your Chances
Before Applying
| Action | Impact | Timeframe |
|---|---|---|
| Satisfy all defaults and CCJs | Shows lenders you’ve dealt with the issue | Do this now |
| Register on the electoral roll | Improves credit score and identity verification | Immediate effect |
| Close unused credit accounts | Reduces total available credit (can help affordability) | 1–2 months |
| Keep credit card balances below 30% | Shows responsible credit use | 1–3 months |
| Don’t apply for new credit | Every application leaves a hard search | 3–6 months before mortgage application |
| Set up direct debits for all bills | No more missed payments | 6+ months of clean record |
| Build credit with a credit-builder card | Makes small purchases, pay in full each month | 6–12 months |
| Save the largest deposit possible | Single biggest factor in improving your options | Ongoing |
| Check your credit report for errors | Incorrect information can be challenged and removed | 2–4 weeks for corrections |
Check All Three Credit Reports
| Agency | Where to check for free |
|---|---|
| Experian | moneysavingexpert.com/creditclub or Experian app |
| Equifax | Clearscore (clearscore.com) |
| TransUnion | Credit Karma (creditkarma.co.uk) |
Check all three — lenders use different agencies and your file may differ between them.
Specialist vs Mainstream Lenders
| Feature | Mainstream lender | Specialist lender |
|---|---|---|
| Examples | Nationwide, HSBC, Barclays, NatWest | Pepper Money, Kensington, Aldermore, Precise Mortgages |
| Criteria | Clean credit history preferred | Accept varying degrees of adverse credit |
| Rates | Lowest available | Higher — reflecting additional risk |
| Deposit | 5%–25% | Often 15%–30% |
| Application | Direct or via broker | Usually broker-only |
| Assessment | Automated credit scoring | Manual underwriting — human decisions |
Manual underwriting means a real person reviews your application and circumstances. This is crucial for people with bad credit — a human can understand context that a computer cannot.
Interest Rates — What to Expect
| Credit profile | Typical rate (75% LTV, March 2026) |
|---|---|
| Excellent credit (990+ Experian) | 3.8%–4.2% |
| Good credit (minor issues, 2+ years old) | 4.2%–4.8% |
| Fair credit (satisfied defaults, 3+ years old) | 4.8%–5.5% |
| Poor credit (recent defaults, CCJs) | 5.5%–7.0% |
| Very poor credit (IVA, bankruptcy discharge) | 6.5%–8.5% |
These are indicative — your rate depends on your specific circumstances, deposit, and the lender.
Monthly Payment Comparison
How a higher rate affects payments on a £200,000 repayment mortgage over 25 years:
| Rate | Monthly payment | Extra per month vs 4.0% | Extra per year |
|---|---|---|---|
| 4.0% | £1,056 | — | — |
| 5.0% | £1,170 | £114 | £1,368 |
| 6.0% | £1,289 | £233 | £2,796 |
| 7.0% | £1,414 | £358 | £4,296 |
Strategy: Accept the higher rate now, make payments on time for 2 years, then remortgage to a better deal as your credit improves.
The Remortgage Strategy
Many people with bad credit follow this approach:
| Step | Timing | Action |
|---|---|---|
| 1 | Now | Get a specialist mortgage at a higher rate |
| 2 | Month 1–24 | Make every payment on time, build credit score |
| 3 | 2 years | Credit issues are older (some may have dropped off) |
| 4 | 2 years | Remortgage to a mainstream lender at a better rate |
| 5 | 6 years | All adverse credit drops off your file — full access to best rates |
This “credit repair mortgage” approach means you get on the property ladder now and refinance to cheaper terms as your credit improves.
Common Mistakes
| Mistake | Why it’s harmful |
|---|---|
| Applying to multiple lenders yourself | Each declined application adds a hard search — worsening your credit |
| Not using a specialist broker | You won’t know which lenders accept your specific issues |
| Hiding bad credit from the lender | They will find out — and your application will be declined |
| Taking out payday loans to cover the deposit | Payday loans on your credit file are a major red flag |
| Not checking your credit report for errors | Incorrect entries could be causing unnecessary declines |
| Applying too soon after a major issue | Waiting 1–2 years can dramatically improve your options |
Useful Links
- First-Time Buyer Guide
- How Much Can I Borrow?
- Mortgage Application Timeline
- Mortgage Rate Predictions 2026
- Remortgage Step-by-Step Guide
- How to Improve Your Credit Score
aliases:
- /mortgages/mortgage-application/buying-house-bad-credit/
Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance — we do not offer financial advice. Seek independent mortgage advice before making decisions about borrowing.