What counts as bad credit for mortgage purposes?
Bad credit is a catch-all term for negative marks on your credit file. Lenders weigh up the type of problem, the amount involved, how long ago it happened, and whether you have since cleared it. Even something small, like a missed phone bill, can show up. For a closer look at how UK lenders judge each type of issue, read the full bad credit mortgage guide.
Missed or late payments
- One or two missed payments are fairly common, and some lenders will look past them
- A repeated pattern of missed payments is more serious and narrows your choices
- They stay on your credit file for six years from the date of the missed payment
Defaults
- Registered when you have repeatedly missed payments and the creditor closes the account
- They stay on your credit file for six years from the default date
- A satisfied default (one you have since paid off) looks better to lenders than an unsatisfied one
County Court Judgments (CCJs)
- A court order telling you to repay a debt, which counts as more serious than a default
- It stays on your credit file for six years
- Pay it within one month and it can be wiped from the register completely
- A satisfied CCJ is viewed more kindly, especially once it is more than 2–3 years old
Individual Voluntary Arrangements (IVAs)
- A formal deal with your creditors to repay debts over a set period
- It stays on your credit file for six years from the start date
- Some specialist lenders will look at you once the IVA has finished
Bankruptcy
- The most serious credit problem for a mortgage application
- You are usually discharged after one year, but it stays on your credit file for six years
- Very few lenders will look at you while a bankruptcy is still active
- Your options widen a good deal once you are discharged and more time passes
Debt Management Plans (DMPs)
- An informal arrangement to repay your debts at a lower rate
- It is not logged on your credit file as such, though the reduced payments themselves may show
- Lenders may still ask about a DMP on the application form
How long do credit issues stay on your file?
Most negative marks stay visible to lenders for six years. After that they drop off your credit report for good. And the older a problem is, the less weight a lender puts on it.
A lender treats a three-year-old satisfied CCJ very differently from a six-month-old one you still owe. How long ago it happened, whether you have settled it, and proof that you have handled credit well since then all count in your favour.
Check what’s on your credit file
- CheckMyFileAll 3 agencies
See your data from all three UK agencies in a single report. It is the clearest way to know exactly what mortgage lenders will see.
- ExperianFree
A free Experian credit score and report. A lot of mortgage lenders pull Experian data, so it is worth checking.
- EquifaxFree
Free access through ClearScore. Handy for spotting errors that may not show up on the other agencies.
How much deposit do you need with bad credit?
You will usually need a bigger deposit than someone with a spotless credit history. Putting more down lowers the lender’s risk, which in turn opens up more options for you.
A larger deposit also helps you reach better interest rates. On a £200,000 property, the gap between a 15% and a 25% deposit could save you thousands over the mortgage term. See how the bands work using the LTV calculator.
What interest rates can you expect with bad credit?
Bad credit mortgage rates run higher than standard deals, because the lender is carrying more risk. How much higher comes down to how serious your credit issues are and how big your deposit is. Try the repayment calculator to see what that gap looks like in monthly payments.
As a rough guide, expect to pay 1–4% above the rates offered to borrowers with clean credit. So if a mainstream 5-year fix sits at 4%, the bad credit equivalent might land somewhere around 5–8%, depending on your circumstances.
Rates do get better with time, though. Plenty of borrowers start on a bad credit mortgage and then remortgage to a cheaper deal after two or three years, once their credit file has recovered.
How can a broker help with a bad credit mortgage?
A good mortgage broker earns their keep when your credit history is not clean. There are three main ways they make a difference.
Protect your credit score
- Each rejected application leaves a hard search on your file
- Several rejections close together make things worse
- A broker only applies to lenders who are likely to say yes
Access specialist lenders
- Many adverse-credit lenders work through brokers only
- You will not find them on comparison websites
- A broker knows each lender’s criteria and how much they will tolerate
Present your case properly
- A broker can write supporting notes that explain your circumstances
- Context matters: things like illness, redundancy or divorce can be explained
- A well-presented application stands a better chance
How to apply for a mortgage with bad credit
Applying with bad credit follows the same broad path as a standard mortgage, with a few extra precautions along the way.
- 01
Check your credit reports
Get your reports from Experian, Equifax and TransUnion. Look for errors, such as wrong addresses, accounts that are not yours, or debts marked as unsatisfied when you have already paid them. Dispute anything that is wrong.
- 02
Understand your position
Write down every negative mark: what it is, how much, the date, and whether you have settled it. That gives your broker the full picture to work from.
- 03
Speak to a specialist broker
A broker who works with adverse-credit lenders will tell you which products you are likely to qualify for, the deposit you will need, and the rates to expect.
- 04
Gather your documentation
Pull together proof of income, bank statements, evidence of your deposit and ID. If a specific event caused your credit issues, such as illness or redundancy, prepare a short written explanation.
- 05
Apply through your broker
Your broker packages the application and sends it to the lender most likely to approve you. They deal with any questions and keep you posted as it progresses.
- 06
Consider your next move
Once you are on the ladder, keep your payment record clean. After two to three years you may be able to remortgage onto a much better rate.
Speak to a bad credit mortgage specialist
At Clearview Mortgage Solutions, we work with specialist lenders who consider every kind of credit issue. That includes self-employed applicants with adverse credit and people who have been refused a mortgage elsewhere. We read through your credit file, explain the options that are realistic for you, and only apply to lenders where you have a genuine chance of a yes.
Compare deals across the market or get in touch for a free, no-obligation assessment. We will be straight with you about what is possible and help you take the right next step.
I thought a CCJ from three years ago meant I’d never get a mortgage. My broker found a specialist lender and I completed on my first home within eight weeks.
At Clearview Mortgage Solutions, we work with specialist lenders who consider every kind of credit issue. We read through your credit file, explain the options that are realistic for you, and only apply where you have a genuine chance of being accepted. There is no obligation to proceed.