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Bad credit mortgages

If you have bad credit, getting a mortgage can be difficult. However, there are lenders set up to help you. Our guide tells you all you need to know
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What is bad credit? 

Bad credit is a blanket term used to describe a wide variety of personal finance issues that are recorded on your credit file. They could range from having a single late payment, right through to bankruptcy. All of the following circumstances would fall under the umbrella of having bad credit and are loosely in order of severity:

  • No credit score due to never having used credit

  • Missed or late payments

  • Defaulted payments

  • County Court Judgement (CCJ)

  • Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA)

  • Mortgage arrears

  • Bankruptcy and repossession

If you have bad credit, getting a mortgage can be more difficult. However, there is a specific niche of lenders that are set up purely to help customers buying a house with bad credit.

They are often referred to as bad credit lenders or subprime lenders and are usually more flexible than mainstream lenders with the types and severity of bad credit that they are willing to consider.

Can I buy a house with bad credit?

In some cases, yes you can. However, it depends - as well as a vast difference in what each lender considers to be 'bad credit' it will depend on the extent of your credit issues. How much you owe and whether you've repaid debts can also make a difference.

We'll have a more detailed look at how your chances of getting a mortgage are impacted by bad credit, and how the level of bad credit you have can be the ultimate deciding factor:

What minimum credit score do I need to get a mortgage? 

Usually when you have bad credit, you'll have a low score on your credit report. However, each of the three major credit referencing agencies, Experian, Equifax and TransUnion, use a different scoring system. This means that what sounds like a very low score with one agency, may not be so bad with another, or vice versa. 

The vast majority of mortgage lenders use your credit score to help them decide whether to lend to you. Some bad credit mortgage lenders, however, ignore the score entirely and base their decision on a broader credit picture. 

There is no minimum credit score threshold that applies universally across the mortgage industry! Each lender has their own idea of what constitutes bad credit, and the minimum score they're willing to accept, based on their own criteria.

The good news is, this means that being rejected by one provider does not necessarily mean that you would be by all. A broker who specialises in bad credit mortgages should be able to help you find a lender to suit your needs.

How does bad credit affect a mortgage?

Mortgage lenders who are more open to applicants with lower credit scores may refer to their products as 'bad credit mortgages'. However, a 'bad credit mortgage' is not a different type of product, the actual mortgage works exactly the same as any other.

The main difference you will likely notice is that mortgage interest rates for bad credit mortgages are usually higher. You may also have to pay higher fees. Be sure to consider the total cost when you compare bad credit mortgages - including fees.

The type of bad credit you have can also impact how it affects your mortgage application. For example, depending on the lenders' indiviudal criteria, the following will may change how a lender sees your circumstances:

  • How long ago the credit issues occurred - some lenders will disregard older issues

  • Whether or not they are resolved - some lenders prefer that debts are satisfied (repaid)

  • How severe the type of credit issue is - missing a phone bill payment won't be seen in the same light as having a house repossessed, for example

  • Whether your issue is with secured debt - unsecured debt issues are often considered less important than secured debt issues (where the loan is secured against collateral, such as a property or car)

  • How much your debt is - Many lenders are willing to consider debts under £1000, but grow concerned when a default or CCJ relates to a higher amount, for example

How to increase your chances of buying a house with bad credit

There are a number of things that you could do prior to making a mortgage application that may help increase your chances of being accepted. If you buying a house with bad credit, then the key to your success is preparation. Make sure to address the below suggestions to maximise your mortgability:

Use an experienced broker

Whole-of-market mortgage brokers like our partners at Mojo Mortgages have access to every bad credit lender on the market, including some that may not be accessible to the general public.

Using a broker can increase the number of lenders available, meaning there is more chance of finding a lender with criteria that matches your circumstances.

Brokers can also steer you away from applications that would be likely to fail - which can prevent further damage to your credit file. They can also often use their relationships with lenders to convince them to accept borderline applications.

Increase your deposit

Offering a bigger deposit will give you access to better rates, whatever your circumstances. It gives lenders more confidence in your commitment to the loan - they see you as a less risky option.

This is even more important if you have bad credit, as it can go a long way to repairing any concerns the lender has about your ability to repay the mortgage. 

It’s unlikely you'll get a 95% mortgage, as typically at least 15% deposit is needed to buy a house with bad credit. Offering more than 15% will increase your chances of finding a suitable mortgage.

Check your credit file

It’s important to go into your mortgage application with a good understanding of your finances, so make sure you obtain a copy of your credit file from TransUnion, Equifax and Experian to see what information is held about you.

Your credit file can also contain incorrect information, and even the smallest mistakes can impact your score. Check that all names, addresses, and particularly information about past credit issues, are correct. You can approach the credit reference agencies to amend mistakes if you find any. This can take a few weeks, so it’s best to do this early in your planning stages.

Improve your credit score

Your credit file shows your management of past and present debts, including how much you owe, how much you've paid back and whether you've missed any repayments. The score builds slowly over time and negative occurrences, such as CCJs, stay on your file for six years. 

There are a few quick ways to improve your score:

  • If you have any credit issues, try to your best to resolve them as some lenders will prefer a default or CCJ to be satisfied (paid off)

  • Make sure you're on the electoral roll at your current address and check your whole file for mistakes. Cancel accounts that are no longer used, such as old bank accounts or credit cards

  • If you have a low score because you've never used any form of credit, lenders will see this as less severe than bad credit. However, credit builder credit cards are helpful to use to increase your score in these circumstances

  • If you're renting while you save for a deposit, companies like CreditLadder - who record your rental payments on your credit file on your behalf - can help you to develop a picture of financial responsibility

Apply for an agreement in principle

Applying for a mortgage agreement in principle, prior to your full application, will help you to gauge the likelihood of being accepted, without having to damage your credit file further with hard searches.

Typically only soft searches are carried out at this stage, but if you’re concerned, check with your broker or the lender before the searches are done. They will be able to confirm whether a soft or hard search will be carried out.

Multiple hard searches can affect your credit score, so this is a good way not to affect your chances of acceptance any further, if you already have bad credit.

Use a guarantor mortgage or other financial help from family

Guarantor mortgages can be helpful if your credit score is preventing you from getting a mortgage, or you're unable to meet mortgage affordability criteria due to a low income. 

Most people use relatives as a guarantor, but some lenders will accept friends or colleagues. Having a guarantor does not always mean your application will be accepted, but it should improve your chances. Keep in mind that the guarantor's home could be at risk if your mortgage falls into arrears.

Most lenders will also accept a 'gifted deposit' from a family member, which can help those struggling to save one. This can't be a loan and you must be under no obligation to repay the money.

It’s also become more common for people to buy jointly with family. This can increase affordability, but is also beneficial if those you are buying with have better financial circumstances than yours. Some lenders allow you to include up to four borrowers on one mortgage - maybe something to consider if you have a close group of siblings. 

How to apply for a mortgage with bad credit

If you have a bad credit record, your mortgage options are likely to be more limited and less competitive than those available to people with better credit scores.

Mortgage lenders conduct credit checks on all potential borrowers, so there’s no point in trying to hide your credit problems. In fact, being dishonest about your credit history is more likely to reduce your chance of being accepted! 

Some lenders are more sympathetic to certain reasons behind bad credit than others. For example, being in debt because your partner passed away and you've struggled to live on a single income will be seen in a better light than being in debt due to irresponsible spending habits.

The severity of your credit issues will dictate whether or not you're able to get a mortgage approved now, or have to try again when you're in better financial circumstances.

How long might I have to wait if I'm declined?

If you’ve got a history of defaults or CCJs, mainstream lenders may begin to consider your application around six to 12 months after they've been resolved. With more severe issues, such as bankruptcy, most lenders will expect them to have been discharged for a number of years before you're accepted.

Subprime lenders are usually more open to those applicants on the more severe end of the bad credit spectrum, but bankruptcy and repossession are both scenarios where you may struggle to secure a mortgage, even with bad credit lender.

A mortgage broker can to help you work out how likely you are to be able to buy a house with bad credit in your current circumstances, as well as how long you may have to wait, if not.

Advantages of getting a mortgage with bad credit

  • You can buy a home now, rather than waiting

  • You can lock in today’s prices, both in terms of property cost and interest rates, which may go up in the future

  • You can put money wasted on renting accommodation to better use

Disadvantages of getting a mortgage with bad credit

  • Higher interest rates

  • A larger deposit is needed

  • You might be offered a lower LTV (loan to value) on your borrowing

  • You will have less choice of lenders

Kellie Steedquotation mark
Your credit history plays an important role in your chances of getting approved for a mortgage. You may need to pay higher rates if you have poor credit - speaking to an expert can help you find a deal that might be right for you
Kellie Steed, Mortgage Content Writer

Bad credit mortgages FAQs


Uswitch is not a mortgage intermediary and makes introductions to Mojo Mortgages to provide mortgage solutions. Uswitch and Mojo Mortgages are part of the same group of companies. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850. You can check this on the Financial Services Register by visiting the FCA website. Uswitch Limited is registered in England and Wales (Company No 03612689) The Cooperage, 5 Copper Row, London SE1 2LH. Mojo Mortgages is a trading style of Life's Great Limited which is registered in England and Wales (06246376). Mojo are authorised and regulated by the Financial Conduct Authority and are on the Financial Services Register (478215) Mojo’s registered office is The Cooperage, 5 Copper Row, London, SE1 2LH, and head office is WeWork No. 1 Spinningfields, Quay Street, Manchester, M3 3JE. To contact Mojo by phone, please call 0333 123 0012.