Credit problems don’t necessarily mean you can’t get a mortgage. While high street banks may decline applications, specialist lenders consider circumstances mainstream lenders won’t. Understanding your options and how to present your case gives you the best chance.

What Counts as Bad Credit?

Lenders see various issues as negative:

Missed Payments

Late payments on credit cards, loans, or other commitments appear on credit files. Recent missed payments matter more than historic ones.

Defaults

When accounts are closed due to non-payment. Defaults remain on credit files for six years from the default date.

CCJs (County Court Judgments)

Court orders to repay debts. Remain on file for six years. Satisfied CCJs look better than outstanding ones.

IVAs (Individual Voluntary Arrangements)

Formal debt solutions. Significantly impact mortgage options during the arrangement and for some years after.

Bankruptcy

The most serious credit event. Typically need to wait 3+ years after discharge before mortgage options open up.

No Credit History

Never having credit can be as problematic as bad credit. Lenders can’t assess how you manage commitments.

How Lenders View Credit Issues

Lenders consider several factors:

Recency

When did the problem occur? Issues from four years ago matter less than issues from last year.

Severity

How serious was the problem? A single missed payment is different from multiple defaults and a CCJ.

Amount

What values were involved? Small amounts suggest minor problems; large amounts indicate more serious issues.

Explanation

Why did it happen? Temporary circumstances (illness, redundancy) with subsequent recovery look better than ongoing poor management.

Since Then

How have you managed since? Clean recent history demonstrates problems are behind you.

Your Options

Wait and Repair

If problems are recent, waiting while building positive credit history improves options. Eighteen months to two years of clean history makes a significant difference.

Specialist Lenders

Lenders who specifically consider adverse credit. They charge higher rates (reflecting higher risk) but provide options mainstream lenders don’t.

Higher Deposits

Larger deposits reduce lender risk and open more options. 15-20% deposits for bad credit applications work better than minimum deposits.

Guarantor Mortgages

A family member guarantees the mortgage, reducing lender risk. Their good credit supports your application.

Improving Your Position

Before applying:

Check Your Credit Files

Get reports from all three agencies (Experian, Equifax, TransUnion). Check for errors and understand exactly what lenders will see.

Register to Vote

Electoral roll registration helps verify identity and address. Missing registration makes applications harder.

Reduce Outstanding Debt

Lower balances on credit cards and loans improve affordability calculations and demonstrate improving finances.

Avoid New Credit Applications

Each application creates a search on your file. Multiple searches suggest desperation and concern lenders.

Build Positive History

If you have no credit history or very damaged credit, a credit builder card used carefully and repaid in full each month builds positive data.

What to Expect

Bad credit mortgages typically mean:

• Higher interest rates
• Lower maximum LTV
• Larger arrangement fees
• Fewer product options
• More detailed underwriting

The premium you pay reflects the risk. As credit improves over time, remortgaging to better rates becomes possible.

Being Honest

Attempting to hide credit issues doesn’t work – lenders run credit searches and discover everything. Worse, undisclosed problems suggest dishonesty, making declines more likely.

Explain issues upfront with context about what happened and what’s changed since. A well-explained problem is better than a surprise discovery.

Working With a Broker

Specialist brokers know which lenders consider which circumstances. This prevents wasted applications (which damage credit files) and finds appropriate options efficiently.

We assess your situation, identify realistic options, and present your case to suitable lenders.

Talk to Us

SJ Financial Solutions helps clients with credit issues find mortgage solutions. Contact us for honest assessment of your options.