If you have a less than perfect credit history, it can be daunting to look at home finance options. But does having bad credit really mean that you can’t get a mortgage?
We look at how to best make a mortgage application if you have an adverse credit history, what lenders will be looking for, and how the right advice can be particularly helpful to mortgage borrowers with bad credit.
Bad credit is a relative term, as there are multiple credit reference agencies in the UK, all of whom have their own scoring system. When it comes to getting a mortgage, a poor credit history can limit your options; however, it’s important to understand that all lenders assess credit differently.
Some lenders are set on certain credit scores, while others just want to ensure that you don’t have any recent adverse credit. They also tend to use different credit reference agencies, so what might seem like a low score with one lender won’t necessarily be when you go to another.
Typically, however, when we talk about bad credit, we mean:
There is an important distinction between having a poor credit history and having limited or no credit history. The latter typically applies to younger applicants or individuals who have not previously used credit products such as credit cards or loans.
While limited credit history doesn’t carry the same negative implications as missed payments or defaults, it can still present challenges. Without an established track record of managing credit, some lenders may find it harder to assess how you’re likely to handle future financial commitments.
In such cases, one potential way to begin building a credit profile is by using a credit-builder credit card. These are designed to help individuals demonstrate responsible borrowing behaviour over time. Used carefully and consistently, such as by making regular repayments and keeping balances low, they can contribute to gradually improving your credit rating.
It may still be possible to get a mortgage when you have a history of bad credit, but you might have to pay a higher interest rate or wait a little longer to qualify than you had hoped. The important thing is to seek advice from a broker with experience in organising bad credit mortgages, like us, here at Habito. We’ll help you explore competitive mortgage options, though you may find that rates are higher depending on the nature and severity of your credit history.
How difficult it will be to get a mortgage and the number of options available to you will depend on the level of bad credit you have, although keep in mind that all lenders assess the severity of bad credit on their own individual scale. However, there are specialist lenders, known as adverse credit or subprime lenders, who are more open to applicants with a poor credit history.
Yes, you can, but your options will depend on a few key factors, like how old the CCJ is, whether it’s been settled, and how the rest of your credit file looks.
Most high street lenders tend to prefer CCJs that have been fully satisfied and cleared for a set period, usually a few years. That said, some specialist lenders are more flexible, and may be open to considering applicants with more recent or even unsatisfied CCJs, particularly if the amount is small and you've shown responsible financial behaviour since.
Every lender has their own criteria, so if you’ve got a CCJ on your record, it’s definitely worth speaking to a broker who understands the landscape and can match you with the lenders most likely to say yes.
Getting a mortgage with an active Individual Voluntary Arrangement (IVA) is definitely more challenging, as most lenders view this as a sign of significant credit issues.
That said, in very rare cases, there may be specialist lenders who are open to considering applications, but there are a few important things to bear in mind. Most IVA agreements include terms that stop you from taking out new credit without permission, and that includes mortgages. So, even if a lender is willing to consider you, you'd still need written approval from your Insolvency Practitioner (IP) before moving forward.
If your IVA has been completed and is now marked as “satisfied,” things tend to get a bit easier. Over time, and with responsible financial behaviour, more options should start to open up.
Yes, it’s possible - but you might find your options are a little more limited, especially in the first few years after being discharged.
Some lenders will want you to be six years clear of your bankruptcy (which is when it usually disappears from your credit file), while others may consider your application sooner, particularly if you’ve taken steps to rebuild your credit and can demonstrate affordability. You may also be asked to put down a larger deposit than someone with a clean credit history.
It's also worth being aware that the interest rates you're offered may be higher, especially if the bankruptcy was recent. That’s why it’s a good idea to speak to a broker who understands this space; they can help you find the lenders most likely to look at your situation fairly.
It’s definitely more challenging to get a mortgage if you've had a property repossessed, especially in the first few years after it happens. Most mainstream lenders will want at least six years to have passed before they’ll consider your application, and even then, they'll often look closely at how your finances have been managed since.
That said, some specialist lenders may be open to considering your application sooner, depending on the circumstances around the repossession, whether the debt has been settled, and how you've rebuilt your credit since.
Once the six years have passed, the repossession usually drops off your credit file, but it’s still a good idea to be upfront about it with a broker. That way, you’ll get advice tailored to your situation and avoid applying with lenders who are unlikely to say yes.
A bad credit mortgage is not a particular type of mortgage, but lenders that accept some forms of bad credit within their criteria may refer to applications as a bad credit mortgage when the applicant has a poor credit history. You may also hear this referred to as an adverse credit mortgage or a subprime mortgage.
The mortgage itself won’t differ in any way from any other mortgage; however, the interest rate is likely to be higher. This is typically decided on a case-by-case basis by the lender, depending on the level of bad credit involved.
Some lenders are certainly more open to bad credit applications than others, and they might be referred to as subprime, high-risk or simply bad credit lenders.
At the less severe end of the credit spectrum, there are high street lenders who may be willing to accept satisfied defaults or CCJS, but these may have a maximum debt value or minimum time period in which they’ve been clear.
If you have more severe credit issues, it’s likely that you will need to opt for a more specialist lender, as they have greater flexibility in terms of what they will accept. Speak to a broker with experience in getting a mortgage with bad credit, like ourselves, for guidance.
Getting a mortgage with bad credit isn’t always straightforward, but that doesn’t mean it’s out of reach. It all comes down to how lenders assess risk. When you apply, they’ll be weighing up the likelihood of you repaying the loan, and how your past credit behaviour fits into that.
There are ways you can improve your chances of being accepted — whether that’s by working on your credit score, saving a larger deposit, or applying through a lender who’s more open to your specific circumstances.
And the better your credit profile, the more choice you’ll have, including potentially lower interest rates and more flexible mortgage terms.
Here are some practical steps that can help you strengthen your application if you have a history of bad credit:
Lenders may reduce the LTV they offer to low credit borrowers, which means you’d need a larger deposit to make up the difference. However, there is no ‘one size fits all’ answer to this question. All lenders look at risk differently, so the size of deposit you need will depend on both the lender and how bad your credit issues are.
That said, saving as large a deposit as you can afford will usually improve your chances of securing a mortgage, and might even reduce the interest rates available to you. This is particularly beneficial if you have adverse credit.
There is no universal minimum credit score to get a mortgage; in fact, not all lenders even have a minimum credit score; they simply look at the file as a whole.
It’s fairly easy to look at your credit report for free with one of the credit reference agencies in the UK. The major agencies are Experian, Equifax and TransUnion. You should be able to access your report through their websites.
Yes, it’s certainly possible, and there are two ways to look at this. The person with poor credit will negatively impact the application for the creditworthy applicant; however, a person with bad credit may have a greater chance of acceptance if they apply with a creditworthy person.
It’s important to balance applying in joint names, which will likely increase the loan amount, versus applying with someone who has bad credit and may reduce the LTV and/or increase the interest rates available. A broker will be able to help you with this decision.
It can be easier to remortgage with bad credit than it is to take out an initial mortgage, as you’ll likely have built up some equity in the property. However, having bad credit is likely to limit your options and impact the rates available to you.
It’s possible, although there won’t be many lenders willing to approve a second mortgage when you have bad credit, especially if your bad credit relates to the first mortgage.
That said, some lenders have greater flexibility than others, but you’ll likely need a large deposit and the interest rates will reflect the increased risk in this type of mortgage agreement.
Mortgage brokers can be particularly helpful if you have bad credit, as your options may be limited and include lenders that you wouldn’t necessarily have heard of.
As well as matching you with lenders whose criteria you’re likely to meet, an important role a broker plays is to prevent you from applying with lenders who will definitely decline you based on your credit history. Declined credit applications can further impact your credit score; this is something you certainly want to avoid if you already have credit issues.
Habito assists many borrowers with credit issues, and we never pass judgement. We know that sometimes life gets in the way of having a perfect credit file!
No matter whether you’re ready to look for a mortgage with bad credit, or want advice on how to improve your credit for an application down the line, reach out to our expert team for a free chat about your options.
Important: Applying for a mortgage with bad credit may result in fewer lender options, higher interest rates, and the possibility of declined applications, which can further affect your credit score. It's essential to seek tailored advice based on your individual financial circumstances.
Last updated: 28/4/2025
[Disclaimer] This content is intended for general guidance and is not a substitute for personalised mortgage advice.
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