‘Bad credit’ covers a wide spectrum — from a couple of missed payments a few years ago to a recent bankruptcy. Where you sit on that spectrum determines what is possible and what it will cost.
For credit score thresholds by lender type, see Credit Score Needed for a Mortgage UK. For CCJ-specific guidance, see Getting a Mortgage with a CCJ UK.
Types of Adverse Credit and Mortgage Impact
| Adverse event | High-street lenders | Specialist lenders | Notes |
|---|---|---|---|
| Late payment (1–2 months, 3+ years ago) | Often still acceptable | Not needed | Declare and explain |
| Late payment (recent) | Usually decline | Yes | Explain circumstances |
| Default (satisfied, 3+ years) | Unlikely | Yes | Settled carries more weight |
| Default (recent or outstanding) | Decline | Yes | Settle before applying |
| CCJ (satisfied, 3+ years) | Some may consider | Yes | Amount and age matter |
| CCJ (recent or outstanding) | Decline | Yes | Settle first if possible |
| IVA (completed 3+ years ago) | Very unlikely | Yes | Some specialist lenders |
| Bankruptcy (discharged 3+ years) | Decline | Specialist only | 6-year mark is key |
| Multiple issues | Decline | Possibly | Each case assessed |
Specialist Adverse Credit Lenders (2026)
These lenders are typically accessed through mortgage brokers — not directly:
| Lender | Known for |
|---|---|
| Pepper Money | Defaults, CCJs, IVAs |
| Bluestone Mortgages | Complex credit histories |
| Aldermore | Self-employed and adverse credit |
| Vida Homeloans | Defaults, CCJs, complex income |
| Precise Mortgages | Range of adverse credit criteria |
| Kent Reliance | Complex and adverse credit |
Do not approach these directly — brokers have relationships and access to criteria not published publicly. Multiple hard searches from direct applications will worsen your credit position.
What to Do Before Applying
- Get your credit files from all three CRAs — Experian, Equifax (via ClearScore), TransUnion (via Credit Karma) — and check for errors
- Settle any outstanding defaults or CCJs if you can — ‘satisfied’ is significantly better than outstanding for lender assessment
- Build your deposit — the largest deposit you can manage improves your options
- Get on the electoral roll if you are not already
- Avoid new credit applications for at least 6 months before your mortgage application
- Instruct a specialist broker — brokers who deal specifically in adverse credit mortgages will save you significant time and multiple hard searches
The Rate Premium — What Bad Credit Mortgages Cost
Adverse credit mortgages carry higher rates than equivalent mainstream products — typically 1–3 percentage points above Bank Rate-linked high-street rates. On a £200,000 mortgage, an extra 2% over 25 years equates to approximately £40,000–£50,000 more in interest paid.
This does not mean getting an adverse credit mortgage is always wrong — it depends on your alternative (continuing to rent, for example). But it does make a clear case for:
- Using a broker to find the best available adverse credit rate
- Remortgaging to a better deal once your credit history has improved (typically 2–3 years after initial adverse event clears)
Types of Adverse Credit and How Lenders View Each
Not all credit problems are treated equally. Lenders apply a severity scale:
| Adverse Type | Typical Waiting Period | Notes |
|---|---|---|
| 1–2 missed payments | 0–12 months | Minor — many lenders will overlook if otherwise clean |
| 3+ missed payments | 12–24 months | More significant; depends on recency |
| Defaults | 2–3 years after default date | Less severe if satisfied (marked as “settled”) |
| CCJ | 3 years from date of CCJ | Satisfied CCJ treated better than unsatisfied |
| IVA | 3 years after completion | Full-term IVAs take 5–6 years; waiting period starts after completion |
| Bankruptcy | 3 years after discharge | Discharge typically 12 months after order |
The more recent the adverse event, and the more serious its type, the harder and more expensive mortgage access becomes.
Specialist Lenders for Bad Credit Mortgages
Mainstream high-street banks (Halifax, Barclays, Nationwide, HSBC) have automated credit score thresholds that most adverse cases fail. Specialist lenders assess each case manually:
- Pepper Money — accepts defaults, CCJs, satisfied IVAs; strong in self-employed cases
- Bluestone Mortgages — adverse specialist with a tiered product range by credit severity
- Together Money — flexible on credit history, also lends on non-standard property
- Precise Mortgages — accepts missed payments and defaults; popular with brokers
- Kensington Mortgages — long-standing adverse specialist with a wide product range
Access to these lenders requires a whole-of-market mortgage broker — they are not available direct to consumers. Broker fees typically range from £0 (fee-free, commission only) to £1,500 depending on case complexity.
Steps to Take Before Applying
- Get your credit reports from all three agencies (Experian, Equifax, TransUnion) and dispute any errors
- Register on the electoral roll at your current address
- Avoid new credit applications for 3–6 months before your mortgage application
- Save as large a deposit as possible — 25% significantly opens lender options versus 10–15%
- Keep any existing credit accounts in good standing — no missed payments in the 6 months before application
Government Schemes and Bad Credit Mortgages
Some government-backed mortgage schemes have more flexible credit requirements than standard products:
Shared Ownership — you buy a share (typically 25%–75%) of a property and pay rent on the remainder. The mortgage required is smaller, which can make it accessible to buyers with adverse credit. Housing associations administer these schemes and may have their own credit criteria separate from mortgage lender requirements.
First Homes — available to first-time buyers in England, offering a discount of at least 30% on new-build homes. The mortgage needed is reduced accordingly, and some specialist lenders participate.
Mortgage Guarantee Scheme — the government guarantees part of the mortgage to the lender, enabling 95% LTV products. However, lenders still apply their own credit criteria, and adverse credit applicants may not qualify.
For people with significant adverse credit, Shared Ownership often offers the most realistic route to homeownership — because the loan-to-value is inherently lower (you are buying a share, not the whole property) and housing associations sometimes take a more holistic view of applicants.