Self-Employed Mortgage Information With Bad Credit

Being self-employed can already make the mortgage process feel more complex, particularly where income varies or comes from multiple sources. When bad credit is also involved, such as defaults, CCJs, missed payments, or a low credit score, many people assume their chances are very limited. In practice, some lenders will still consider self-employed applicants where income is stable and can be clearly evidenced.

Mortgage Bridge provides clear information to help you understand how self-employed income and bad credit are commonly assessed by lenders. Where appropriate, we can introduce you to an FCA-regulated mortgage adviser who can provide regulated advice.

Can you get a mortgage if you are self-employed and have bad credit?

Yes, it can be possible. Lenders usually look at a combination of factors, including:

• The type and age of the credit issues

• How stable your self-employed income is

• How easily income can be verified

• Your deposit level

• Recent personal and business bank statement conduct

In many cases, income stability and evidence carry more weight than the credit score alone.

How lenders typically assess self-employed applicants with bad credit

1. Type of self-employed income

Lenders usually distinguish between different types of self-employment, including:

• Sole traders

• CIS subcontractors

• Limited company directors

• LLP partners

• Contractors on day rates

• Freelancers

Each income type has different evidence requirements and is assessed differently.

2. Income evidence

Depending on the lender and income type, evidence may include:

• SA302s

• Tax year overviews

• Full or abbreviated accounts

• CIS payslips

• Accountant references or projections

• Business bank statements

For CIS subcontractors, some lenders assess income similarly to employed applicants, which can help where credit history is not perfect.

3. Stability of earnings

Lenders generally prefer to see:

• At least 1 to 2 years of trading history

• Consistent or increasing income

• Ongoing contracts or renewal history for contractors

• Clean and stable recent business bank statements

Income drops or irregular patterns may need explanation but do not automatically rule out an application.

4. Credit history alongside self-employment

Credit issues tend to carry more weight when they are recent. Lenders often look more favourably where:

• Defaults are older than 12 months

• CCJs are older than 3 years

• Issues are settled

• Late payments were isolated

• Recent conduct has been clean for the last 6 to 12 months

A stable trading position combined with improved recent conduct can strengthen a case.

5. Deposit expectations

Deposit requirements vary depending on the credit profile and income strength. General guidance only:

• Around 5% may be possible where credit issues are older and income is strong

• Around 10% is more common where credit issues are more recent

• Around 15% or more may be required where issues are multiple or very recent

Some lenders may be more flexible where CIS income is strong or company profitability is healthy.

Steps that may help before applying

Steps that may help strengthen a self-employed profile include:

• Obtaining a full multi-agency credit report

• Ensuring accounts, SA302s, or CIS payslips are up to date

• Keeping both personal and business bank statements clean

• Reducing personal credit utilisation

• Avoiding overdrafts and returned payments

• Preparing documentation early

Clear and consistent financial information can help lenders better understand your position.

How Mortgage Bridge supports you

Mortgage Bridge provides information to help you understand how lenders commonly assess self-employed applicants with bad credit. We do not provide mortgage advice or recommend lenders.

Where appropriate, we can introduce you to an FCA-regulated mortgage adviser who can review your circumstances in detail and provide regulated mortgage advice.

Next steps

If you are self-employed and have bad credit and want a clearer understanding of how this may affect a mortgage application, Mortgage Bridge can provide information and, where appropriate, introduce you to an FCA-regulated mortgage adviser.

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.

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