Getting a mortgage is tough when you've got a bad credit rating, defaults, County Court Judgments, or a bankruptcy on your record – but it's not impossible.
If you're struggling to find a mortgage because of a poor credit rating, we'd recommend talking to a whole-of-market, impartial broker such as Which? Mortgage Advisers. You can call the friendly team for a free consultation on 0808 252 7987.
Can I get a mortgage if I have a bad credit history?
Most lenders will require a credit check before granting an application for a mortgage. However, some black marks on your credit history will carry more weight than others, depending on the amounts of money involved and how long ago it happened.
If you have a spotted credit history, some high street banks may refuse to lend to you. As an alternative, you can apply with a specialist lender, some of which cater specially to clients who have faced illness, divorce or other difficult life events.
These lenders are more likely to accept people with a poor credit rating and tend to offer more flexibility on affordability assessments.
But they do tend to charge higher-than-average interest and require larger deposits. In many cases, they may require a loan-to-value ratio of 80% or lower, meaning you would have to provide at least a 20% deposit.
Bad-credit mortgage lenders
Our table shows a number of specialist lenders in the UK market and their criteria for people with bad credit, CCJs, IVAs or bankruptcies
Can I re-mortgage after my credit improves?
Making your monthly mortgage repayments on time will help you build a stronger credit history (assuming all other debt is also paid back on time). If your credit rating has gone up after a period of time with a specialist lender, it may be possible to re-mortgage with a high street lender.
Whether you’re able to secure a better rate will depend on your credit score, your income, your property’s current value and the equity you hold in your home. The prospective lender will also run affordability calculations to ensure you’ll be able to afford payments at the new rate into the future.
A range of re-mortgaging deals are available on the high street, so it’s worth shopping around. You generally have to pay fees to re-mortgage, which you should factor into your decision-making.
Which? Mortgage Advisers has a detailed remortgaging guide with all the information you need to help you understand your mortgage options and get the best deal.
How will lenders judge my poor credit history?
When considering your application, lenders tend to look not just at your credit rating, but the details of your credit history. The lender will consider what happened, when it happened and what the circumstances were at the time. A missed utility bill will be judged differently to a County Court Judgement, for example.
Criteria will also vary from lender to lender, so it may come down to finding one suited to your circumstances.
Use our menu below to see how different defaults or adverse credit may be treated by lenders - including missed payments, debt management plans, CCJs and bankruptcies.
Should I run a credit check?
Whether or not you think these factors apply to you, you should always check out your credit report before applying for a mortgage. The three biggest organisations for this are Callcredit, Equifax and Experian. If you're concerned, it's worth checking how you fare with all three companies, as they all score slightly differently.
Once you have your report(s), consider what you can do to improve your credit rating, and check that all the information on record about you is correct.
In some cases, it will be better to wait until your credit history has improved so you can access more affordable mortgage deals. A good mortgage adviser will be able to ascertain what mortgage deals you are likely to be accepted for and advise whether you're better off waiting.
It’s worth being cautious about applying for a mortgage if you think you might be rejected. Every time you make an application for credit, it gets recorded on your credit history, and unsuccessful applications can bring down your score.
If you’re applying for a mortgage in principle, lenders may be able to conduct a ‘soft check’, which does not show up on your record. However, be aware that a soft check may fail to uncover everything in your history, so that your mortgage application may fail if issues come to light later.
Find out more: How to improve your credit rating - take steps to boost your score
Steps to improve your mortgage chances
If you have a poor credit history, there are a number of steps you can take to improve your chances of getting a mortgage.
- Give it time – many blemishes in your record could be seen as less serious over time, especially if your financial situation begins to improve
- Repair your credit history – establish a pattern of consistent payments and responsible credit usage
- Present as a lower risk – offer a higher deposit and a stable income, which may mean targeting lower value properties
- Be honest about your situation – banks will conduct thorough searches, and trying to hide adverse credit will look worse for you in the long-term
- Consider your partners’ debt – buying with a partner may mean their credit history will be taken into account
- Have an explanation – banks will be interested in why you got into financial trouble and what has happened since then
Find out more: Improving your mortgage chances - how you can strengthen your application.