Getting a mortgage with bad credit

Can you get a mortgage with bad credit in the UK?  

Depending on the nature of your credit history and your wider financial circumstances, there is still a chance of getting a mortgage. However, it is likely to be more challenging, come with higher interest rates and may affect the type of offers and number of deals available to you. 

Mortgage lenders will review your credit history to assess your financial behaviours and check that you are likely to repay the money that you borrow. If they find that you’ve struggled to manage debt repayments in the past, they may be more likely to decline your application. 

Common reasons for mortgage declines include low credit scores, previous debt issues and affordability concerns. Even if you pass credit check, you may still not be approved for amount you have requested, if you do not meet the lender’s affordability checks. 

How to know if you have bad credit for a mortgage? 

It’s a good idea to check your credit score before preparing to buy a home and applying for a mortgage. You can get a free credit report through agencies such as, Equifax, TransUnion and Experian. These agencies will usually offer free credit reports through their apps.  

Another way to check whether your credit history is likely to impact your ability to secure a mortgage is by getting a mortgage in principle (MIP). This is a personalised indication from a bank or lender with how much they might be willing to lend you, based on a simple assessment of your financial history.  

With a MIP, you’re not committing to anything, and your credit rating won’t be affected. It doesn’t guarantee that you’ll get a mortgage, but it can help you to understand your options more clearly.  

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 What is bad credit?   

Bad credit refers to a financial history of not paying bills on time or owing too much money to lenders.  

Generally, bad credit will be outlined in a credit report, which provides an overview of an individual’s previous borrowing and bill-paying behaviour across credit cards, utility bills, loans and more. 

In the UK, credit reference agencies use their own scoring systems to summarise an individual’s credit history. Although scoring ranges vary between agencies, a stronger credit profile with a higher score can improve your chances of securing a mortgage, and vice versa.  

Common causes of bad credit or low credit scores include: 

• Missed or late payments. 

• Defaults, when an individual fails to repay debt for an extended period, leading their lender to close their account. 

• County court judgements (CCJs), which may be issued when you fail to repay money you owe. 

• Bankruptcy or Individual Voluntary Arrangements (IVAs), which are formal solutions for dealing with significant debt. 

 How a bad credit score impacts your mortgage application  

While there is no set minimum credit score required to get a mortgage, it will often impact whether a lender decides to offer you a loan. The smaller your deposit, the more stringent the lenders checks will be, due to increased risk for them. 

Your credit history is one of many factors lenders may consider when assessing how you manage borrowing and whether to offer you a mortgage.  

While a low credit score can reduce your chances with high-street lenders, it doesn’t necessarily mean that you won’t be able to get a mortgage with another provider.  

However, it may just result in: 

• Higher interest rates compared to standard mortgage deals 

• A larger deposit requirement 

• Lower borrowing limits 

• More detailed checks on your income and spending 

Additionally, specialist or adverse credit lenders are also available that may be more flexible, considering other aspects such as your current income, job stability, recent financial behaviour, and how long ago any credit issues occurred when offering mortgages. 

Mortgage options for those with bad or adverse credit  

If you have bad or adverse credit, you could still have some mortgage options, but they may differ from standard mortgage offers.  

Mainstream or ‘high street’ lenders 

Some high street lenders may consider your application if your credit issues were less severe or happened some time ago.  

Specialist mortgage lenders 

For more complex cases, specialist or adverse credit lenders are likely to be more flexible. However, their mortgage offers are likely to come with higher interest rates, additional fees, or tighter conditions. 

Guarantor mortgages 

Another option worth considering is a guarantor mortgages, where a family member or close friend agrees to support your application by offering their own income or savings as security. This may reduce the lender’s risk and could improve the likelihood of your application being considered.  

Delay your mortgage application 

If you have bad credit, it’s important to consider whether now is the right time to move. Whilst owning your own home could offer greater security in the long run, in some cases, waiting a bit longer and improving your credit score first, could provide access to better deals and lower costs in the short term. 

To understand which of the options may be available for your own circumstances, you could speak to a regulated mortgage advisor or mortgage broker. 

How your deposit size affects approval  

Your credit score is not the only factor that influences your mortgage application. In their assessments, lenders also check affordability when deciding how much you can borrow, with the size of your deposit also influencing the deals that you are offered. 

Deposit sizes are typically expressed as a percentage of the overall property price, known as loan to value (LTV). If you were to put down a 10% deposit, your LTV would be 90%.  

Larger deposits (and lower LTVs) reduce the lender’s risk and lower the barriers for you if you have poor credit.  As a result, borrowers with larger deposits often secure more favourable interest rates. If you a low credit score and a smaller deposit, you may be more likely to have your application declined. 

You can use our mortgage calculator to see how different deposit sizes could affect the amount you might be able to borrow and monthly payments.  

If you have bad credit, having a larger deposit can improve your chances of being approved for a mortgage, and may help you access better deals.  

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Tips for improving your credit score for mortgage approval  

If you are declined for a mortgage due to adverse credit, it doesn’t mean that homeownership is off the cards forever. There are several steps to take to improve your credit score, and additional changes that can make your application more favourable to lenders. 

Alongside credit ratings, lenders also carry out affordability assessments, looking at your income, spending, and existing debts. Therefore, showing stable finances and reducing what you owe can strengthen your application.  

Speaking to a mortgage broker can also be useful, as they may be able to explain how different lenders assess risk and which lenders may be more willing to consider applicants with adverse credit.  

Here are some simple ways to improve your credit profile: 

1. Make all payments on time, including credit cards, loans and household bills 

2. Reduce outstanding debt, which can improve your score and affordability 

3. Register on the electoral roll well in advance 

4. Avoid taking out new loans or having hard credit checks 

Getting help with debt or bad credit 

If you’re struggling with debt, getting advice and support early can help you regain control of your finances, and improve your chances of securing a mortgage in the future. 

In the UK, there are several free, confidential services offering practical guidance in relation to budgeting, managing repayments, and formal solutions if required. A full list of resources can be found on the Gov.uk website, including: 

• MoneyHelper  

• National Debtline 

• Citizens Advice 

FAQs  

• Can I remortgage with bad credit?  

  Yes, it is possible to remortgage with bad credit, but your options may be more limited. You may need to look at specialist lenders, and the rates available could be higher than standard deals. Speaking to a broker can help you find lenders more suited to your situation.

• What credit score do you need to get a mortgage with bad credit?

  There is no universal minimum credit score, as each lender sets its own criteria and uses different scoring systems. High-street lenders prefer stronger credit profiles, while specialist lenders may accept lower scores.

• How much deposit do you need for a bad credit mortgage?

  In some cases, it may be possible to get a mortgage with bad credit with a smaller deposit, but eligibility will depend on the lender, your credit history and your wider financial circumstances. In general, a larger deposit may improve the range of products available and could help you access more competitive rates. If you have bad credit, it may be helpful to speak to a broker about the options available to you. 

• Can I get a mortgage after bankruptcy?

  It can be difficult to get a mortgage after bankruptcy. Some lenders may consider applications once you have been discharged, although eligibility criteria vary and mainstream lenders may require a longer period of improved financial history.  You can speak to a regulated broker to assess your options.

• Can I get a mortgage if my house was repossessed?

  Yes, but it is challenging. Repossession is viewed as a serious credit issue, so many lenders will apply stricter rules, such as requiring a larger deposit and a period of improved financial behaviour. Repossession is usually viewed as a serious credit issue, so lenders may apply stricter criteria and may require a larger deposit or a longer period of improved financial behaviour before considering an application.

• How can I improve my credit score to get a mortgage?

  Improving your credit score takes time, but small steps can make a difference. Some of the best ways to improve your credit score include registering to vote, paying bills on time, reducing your debt, and paying off credit card balance regularly. For more personalised advice, speak to a regulated mortgage advisor or broker.

• Should you use a mortgage broker if you have bad credit?

  If you have poor credit, speaking to a regulated mortgage adviser or broker may help you understand which options could be available to you. Using a mortgage broker can help identify suitable lenders that are more likely to accept your application and will advise on the different processes and criteria. They can also access specialist lenders that are not always available directly to consumers.

*Sources: HomeOwnersAlliance, Citizens Advice Bureau: Discharge from Bankruptcy; Gov.uk Debt Advice 

Please note: Your home may be repossessed if you do not keep up repayments on your mortgage. Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a regulated mortgage adviser.