By Matthew Horan CeMAP · Mortgages
Quick answer: An imperfect credit score doesn't automatically rule you out of getting a mortgage. Every lender looks at credit history differently, so a deal that one lender declines may be acceptable to another. A whole-of-market broker can check lender criteria before you apply, which can improve your chances and help you avoid unnecessary declines. Clarity Mortgages & Protection in Altrincham gives fee-free advice, with no obligation.
If you've missed payments, had a default or a county court judgment (CCJ), or been through a debt arrangement, it's easy to assume the door is closed. Plenty of people never even try, because they've been told, or have told themselves, that they won't get a mortgage.
That's often not true. It's one of the most common misunderstandings we hear, and it can cost people years of waiting when they didn't need to.
Here's how lenders actually view credit history, why the lender you pick matters so much, and why going to your own bank or searching online isn't always the best first step.
What does "adverse credit" actually mean?
Adverse credit is a general term for anything on your credit file that a lender might see as a sign of risk. Common examples include:
Missed or late payments on loans, credit cards, phone contracts or utility bills
Defaults, where a lender has closed an account after missed payments
County court judgments (CCJs) or Scottish equivalents
A debt management plan (DMP)
An individual voluntary arrangement (IVA)
Bankruptcy, including discharged bankruptcy
A previous repossession
Not all of these are treated the same way. A single missed phone bill from three years ago looks very different to a recent unsatisfied CCJ.
There is no single "pass mark"
One of the biggest myths is that there's a magic credit score you need to hit. There isn't.
The score you see from a credit reference agency such as Experian, Equifax or TransUnion is a helpful guide, but lenders don't use it as a simple pass or fail. Each lender runs its own assessment, with its own rules about what it will and won't accept.
When a lender looks at adverse credit, it usually weighs up things like:
How recent it is. Older issues generally count for less than recent ones.
How serious it is. A small, one-off late payment is viewed differently to a large default.
Whether it's been settled. A satisfied default or CCJ often looks better than one still outstanding.
What has happened since. A clean record over the last 12 to 24 months can make a real difference.
The size of your deposit. A bigger deposit can reduce the risk for the lender.
Your income and affordability. Stable, provable income matters.
Two people with the same score can get completely different answers from two different lenders.
Why the lender you choose matters so much
High street banks tend to have the strictest criteria, and they only offer you their own products. If your application falls outside their rules, the answer is usually a straight no, and you may not be told why.
Other lenders take a different approach. Some will consider applications with certain types of adverse credit, often looking at the circumstances behind it rather than just the headline. Some specialise in it.
The catch is that you can't easily see this from the outside. Lender criteria aren't published in a way that's simple for a consumer to compare, and they change regularly.
The risk of applying to the wrong lender
When you make a full mortgage application, the lender carries out a credit check that leaves a footprint on your file. If you apply and are declined, then try somewhere else, and then somewhere else again, those searches can start to stack up.
That can make a difficult situation harder. It's the reason many people with adverse credit are better off finding out where they fit before they apply, rather than learning by trial and error.
How a whole-of-market broker can help
This is where speaking to a broker like us can make a real difference.
A whole-of-market broker can look across the wider range of lenders available, rather than one bank's products. In practice, that can help in several ways:
Matching you to suitable lenders. We know which lenders are more likely to consider your situation, based on what's on your file.
Checking criteria before you apply. This can help you avoid unnecessary declines and unnecessary searches on your credit file.
Presenting your case properly. Context matters. Explaining a one-off event, such as an illness or a redundancy, can help a lender understand the full picture.
Comparing the options. You can see how rates, fees and terms stack up across different lenders, rather than relying on a single offer.
One adviser throughout. You deal with the same person from first conversation to completion.
Depending on your circumstances, that can mean a better chance of being accepted, and potentially a better rate than you'd find by going to your bank or searching online on your own. We can't promise that, because every case is different and lenders make their own decisions, but comparing the market gives you the best chance of finding the right deal.
Will I pay a higher rate?
Sometimes, yes, and it's better to be upfront about that. Lenders that accept more significant adverse credit can charge higher rates than those for people with a clean record, because they take on more risk.
That said, it isn't always the case. Where your issues are minor or historic, there may be mainstream lenders who would still consider you at competitive rates. And if you do take a higher rate now, you may be able to move to a better deal later as your credit history improves. That's one reason a mortgage review a couple of years down the line can be worthwhile.
Practical steps to take before you apply
There are some simple things you can do now to put yourself in a stronger position:
Check your credit reports. Look at all three main agencies, as they can hold slightly different information.
Look for mistakes. Errors do happen, such as accounts that are wrongly listed as unpaid or that belong to someone else. These can be corrected.
Register on the electoral roll. Being on it at your current address helps lenders verify who you are.
Pay everything on time. Even small bills. Recent behaviour carries weight.
Keep balances down. Try not to max out credit cards or overdrafts.
Hold off on applying for new credit. Multiple applications in a short space of time can count against you.
Speak to a broker before applying for a mortgage. That way you're not guessing which lender might say yes.
It doesn't matter whether you're a first-time buyer, moving home or looking to re-mortgage. If you're thinking about re-mortgaging, you may also find it useful to read When should you re-mortgage? Six moments that matter for Altrincham homeowners.
Don't forget protection
Once a mortgage is in place, it's worth making sure your family and your home are protected if the worst happens. Mortgage-only life insurance doesn't cover everything. If you're not sure, read Is Mortgage-Only Life Insurance Enough? We review mortgage and protection together.
Frequently asked questions
Can I get a mortgage with a bad credit score?
Often, yes, depending on the nature of your credit history and your wider circumstances. Lenders have different criteria, so the right lender can make a big difference. Nothing is guaranteed, and every application is assessed on its own merits.
What counts as adverse credit?
Anything on your credit file that suggests a higher risk to a lender, such as missed payments, defaults, CCJs, a debt management plan, an IVA or bankruptcy.
Is it better to go to my own bank?
Your bank may be a good option, but it can only offer its own products and follows its own rules. If it says no, that doesn't mean every lender will. A broker can compare options across the market, including your own bank.
Will a broker make my credit score worse?
No. Speaking to a broker doesn't affect your credit score. We can usually discuss lender criteria before you make a full application, which helps you avoid unnecessary credit searches.
Will I pay more with adverse credit?
You may pay a higher rate than someone with a clean record, particularly with more serious or recent issues. Minor or older issues can make less difference. It's worth comparing before you decide.
Can I improve my credit before applying?
In many cases, yes. Correcting errors, being on the electoral roll, paying on time and keeping balances low can all help over time. We can advise whether it's worth waiting or whether you could apply now.
Does it cost anything to speak to you?
No. We don't charge a fee for our advice.
If you're worried about your credit history and think a mortgage is out of reach, it's worth a conversation before you rule yourself out. Our advice is fee-free and there's no obligation. If you're in Altrincham, Trafford or Cheshire, get in touch and we'll tell you honestly where you stand.
About the author
Matthew Horan CeMAP is Principal of Clarity Mortgages and Protection, an independent, fee-free mortgage and protection broker based in Altrincham. He has over 10 years' experience helping individuals, families and business owners with mortgages and protection, and writes in plain English because most people aren't given the chance to understand what they're signing.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
This article is general information, not advice. What's right for you depends on your own circumstances. Acceptance of an application depends on the lender's criteria and is not guaranteed.
