Can you get a mortgage with bad credit?

Who is this page for?

Whether you are a first time buyer, home mover or looking to remortgage, find out how a bad credit score can affect being approved for a mortgage. 

If you have a good credit rating, you may want to visit our pages for first time buyers and remortgaging instead.

Can I get a mortgage with bad credit?

Getting a mortgage with bad credit is possible, but it can be harder. Lenders will look at the credit score of people who apply for a mortgage. They use your credit history as an indication of how likely you are to make repayments and how well you'll manage your account.

If you have a bad or low credit rating, you might find it harder to get a mortgage for this reason. For example, if you have had a loan, but not been able to afford to pay it back each month, this might show that you can’t afford to take out a mortgage.

Having bad credit does not mean you cannot get a mortgage. It could vary depending on your credit rating – as there can be a fine line between ‘fair’ and ‘bad’ credit scores.

Some lenders offer mortgages designed for people with bad credit. But these can include higher interest rates and fees.

If you have mortgage applications denied due to poor credit, it can be better to build up your credit score before reapplying. This should improve your chances of getting a mortgage, whether you are a first time buyer, moving house or looking to remortgage.  

What is 'bad credit'?

Having ‘bad credit’ means that you have a low credit score. This can be due to missing repayments on loans or credit cards, or not paying bills on time. 

You can get a bad credit rating if you have:

  • A high amount of debt
  • Been recently declared insolvent (including bankruptcy, Debt Relief Order and an Individual Voluntary Agreement).
  • Missed repayments
  • Defaulted on payments
  • Been served a County Court Judgement (CCJ)

In the UK, three main credit reference agencies (CRAs) hold a credit report on you. These are:

  • Experian
  • Equifax
  • TransUnion

The information each one holds, and their scoring method may differ, but they should align in terms of giving you a good or bad credit rating.

If you have never taken out credit or any type of loan, you will not have a credit history. This makes it hard for CRAs to assess you and can lead to a low credit score.  

Why is it harder to get a mortgage with bad credit?

Getting a mortgage with bad credit can be harder because it can signal to lenders that you may struggle to pay it back. If a lender gives a mortgage to someone who can’t afford it, it’s not good for either party.

Your credit rating is one of the first things a lender will check when you apply for a mortgage. A poor score can be an instant red flag, which can prevent or hold up your application.

If you apply for a mortgage with bad credit, it can take longer than usual. A lender will want to see more evidence of your finances, so they know whether or not you can make repayments on a mortgage.

Even if you have bad credit, lenders may look beyond just your credit score to assess your situation. Having a few small issues in your past, such as the odd late payment on your phone contract, should not stop you from getting a mortgage. 

How to increase your chances of getting a mortgage if you have bad credit

If you have a mortgage application declined, you may want to build your credit score before applying again.

Your credit score builds slowly over time. Most negative items stay on your credit report for around six years. These include CCJs, instances of bankruptcy, missed payments and defaults.

If you’re not sure whether your credit score is high enough, you can apply for a mortgage Agreement in Principle. A lender will perform a soft credit check to understand what your score is. This check will show up on your credit file but is not visible to other lenders, so even if you’re declined it won’t affect your ability to apply for a mortgage with a different lender.

But you can do a few things to improve your credit score in the short term. To better your credit score:

  • Register to vote - Make sure you are on the electoral role
  • Look for and amend mistakes on your credit report - Even a wrong address can affect your score
  • Meet all bill payment deadlines - Don't miss a phone, internet or energy bill
  • Check for fraud - If you've been the victim of fraud, your score may be lowered unfairly
  • Pay off outstanding debt - Where possible, pay back loans before trying to get a mortgage
  • Cancel unused credit cards and bank accounts - If you've not used an account or credit card for a long time, you may want to close it

Improving your credit score is not a guarantee that you will get a mortgage. But it can be a good place to start and increase your chances of acceptance next time.

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like MoneyHelper.

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