Getting a mortgage with bad credit may be possible, depending on the type of credit issue, when it occurred, whether it has been resolved and how your finances look today. Defaults, CCJs, missed payments and previous debt solutions do not necessarily prevent you from obtaining a mortgage, although they may reduce the number of lenders available.
Lenders use different criteria and consider each application individually. Your income, affordability, deposit, recent financial conduct and wider credit history can all affect the options available.
This guide explains how adverse credit can affect a mortgage application and brings together more detailed information for different circumstances.
What is considered bad credit?
Bad credit, sometimes called adverse credit, generally means that your credit history contains information that may cause a lender to consider an application higher risk. This can include:
- County Court Judgments (CCJs)
- Defaults on credit agreements
- Missed or late payments
- Mortgage or secured-loan arrears
- Regular or unarranged overdraft use
- High levels of unsecured borrowing
- Debt management plans
- Individual Voluntary Arrangements (IVAs)
- Previous bankruptcy
- Several different credit issues appearing together
Credit issues are not all treated in the same way. A lender may consider the amount involved, the type of account, how long ago the issue occurred, whether it has been settled and whether your more recent payment history demonstrates greater financial stability.
Can you still get a mortgage with bad credit?
Bad credit does not automatically mean that a mortgage application will be declined. Some lenders consider applications involving historic or relatively minor credit problems, while others may consider more recent or substantial adverse credit under particular circumstances.
The outcome will depend on the lender’s criteria and the overall strength of your application. This means two applicants with apparently similar credit histories could receive different outcomes.
All mortgages remain subject to status, affordability, lender criteria and a full assessment of your circumstances.
How lenders may assess bad credit
A lender will normally consider your complete financial position rather than relying on one credit score or one entry on your credit report.
How recent the credit issue is
Recent credit problems may have a greater effect than older issues, particularly where missed payments or arrears are continuing. However, every lender sets its own acceptable timeframes.
The type and amount of the issue
A small communications or utility default may be assessed differently from a substantial loan default, mortgage arrears or a recent court judgment.
Whether the debt has been resolved
Some lenders prefer debts to have been settled before an application is made. Other lenders may consider an outstanding issue, depending on its value, age and the wider circumstances.
Your recent financial conduct
Lenders may review recent credit commitments and bank statements for signs that payments are being maintained and finances are being managed sustainably.
Your income and affordability
You will still need to demonstrate that the proposed mortgage is affordable alongside household spending, credit commitments and other regular outgoings.
Your deposit
A larger deposit can reduce the loan-to-value ratio and may increase the range of potential options. It does not, however, guarantee that an application will be accepted.
Guides for different bad-credit circumstances
The effect of adverse credit varies according to the circumstances. Use the guides below to explore the issues most relevant to you.
CCJ mortgages
The age, amount and settlement status of a CCJ can all affect how it is assessed.
Read our guide to getting a mortgage with a CCJ
Mortgages with defaults
Lenders may consider what caused a default, when it was registered, its value and whether it has since been settled.
Read our guide to mortgages with defaults
Mortgages after missed or late payments
The effect of missed payments can depend on the type of account, how many payments were missed and how recently they occurred.
Read our missed-payments mortgage guide
Mortgages after an IVA, DMP or bankruptcy
Previous debt solutions can affect lender choice and may result in additional eligibility requirements.
Read our guide to mortgages after debt solutions
Mortgages with multiple credit issues
Where several adverse entries appear together, lenders may consider the overall pattern, the total amounts involved and your subsequent financial conduct.
Read our guide to mortgages with multiple credit issues
Joint mortgages when one applicant has bad credit
A joint application normally involves both applicants being assessed. One applicant’s adverse credit can therefore affect the lenders and products available to both applicants.
Read our joint mortgage and bad-credit guide
Mortgages using benefits or complex income
Some lenders may accept particular benefits and additional income sources, although the way this income is assessed varies.
Read our benefits and complex-income mortgage guide
Self-employed mortgages with bad credit
Self-employed applicants may need to demonstrate both their income and the background to any adverse credit. The evidence required will depend on the applicant’s trading structure and the lender.
Read our self-employed and bad-credit mortgage guide
No-deposit mortgages with bad credit
Obtaining a mortgage without a conventional deposit can be particularly difficult where adverse credit is also present. Any available options may involve specific eligibility requirements or additional security.
Read our no-deposit and bad-credit mortgage guide
How to prepare before applying
Applying to unsuitable lenders can result in unnecessary credit searches and declined applications. Before proceeding, it may help to:
- Check your credit reports for incorrect or outdated information
- Make all current payments on time
- Bring outstanding accounts up to date where possible
- Reduce unsecured borrowing where affordable
- Avoid taking out unnecessary new credit shortly before applying
- Keep recent bank statements free from unpaid items where possible
- Make sure you are registered on the electoral roll at your current address, where eligible
- Prepare evidence explaining any unusual or one-off circumstances
- Save a larger deposit where this is realistic
These steps cannot guarantee mortgage approval, but they may help present a clearer and more stable financial picture.
Read our practical guide to improving your credit before applying
Why bad-credit mortgage applications may be declined
A mortgage application is not always declined because of one isolated issue. A lender may decide that the combined risk falls outside its criteria.
Possible reasons include:
- Credit problems that are too recent for the selected lender
- Continuing missed payments or arrears
- Unaffordable existing credit commitments
- Insufficient verified income
- Bank-statement conduct that does not meet the lender’s requirements
- A deposit or loan-to-value ratio outside the lender’s criteria
- Information on the application that cannot be verified
- Applying to a lender whose criteria do not match the circumstances
A decline from one lender does not necessarily mean every lender will reach the same decision. However, it is sensible to understand the reason before making another application.
Read what to do if your mortgage application has been declined
Understanding your possible options
Adverse credit can make obtaining a mortgage more complicated, but it does not always place home ownership or remortgaging out of reach. Preparation, timing, affordability and selecting a lender whose criteria fit the circumstances can all be important.
Mortgage Bridge provides general mortgage information and acts as a mortgage introducer. We do not provide regulated mortgage advice. If you choose to make an enquiry, we may introduce you to an FCA-regulated mortgage adviser who can assess your individual circumstances and provide regulated advice where appropriate.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.