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How to get a mortgage with bad credit

There are plenty of mortgage options out there for people with bad credit. However, you might need to do extra research than people with good credit. It may be worth building up your credit score before you apply if you’ve already been declined.

6 min read
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Can you get a mortgage with bad credit?  

Getting a mortgage with bad credit is possible because there are mortgage brokers and lenders who specialise in this area. Bear in mind that with bad credit your options may be more limited, and you may face higher interest rates. Whether you get accepted and the interest rate you’ll be charged will depend on your individual circumstances and the lender’s criteria.

The impact that bad credit has on your application may also depend on factors such as:

  • how serious the negative markers on your credit history are
  • how long ago the markers were registered

Serious markers such as defaults and CCJs that occurred recently are more likely to be of concern to lenders than one missed payment that occurred several years ago, for example. Each lender will use their own weighting systems surrounding this.

If you have bad credit, lenders may see you as high risk, so they make as you for extra documentation to support your application, such as additional bank statements or payslips, for example. Ultimately, they want to see evidence that you’ll be able to afford the repayments.

Can you get a mortgage if you’ve been made bankrupt? 

You’ll find it much more difficult to get approved for a mortgage if you’ve been made bankrupt. Bankruptcy is a serious negative marker that stays on your credit report for six years and can ring alarm bells with lenders.

However, you should have a better chance of getting a mortgage after the bankruptcy has automatically dropped off your credit report (following the six-year period).

It may be worth speaking to a speak to a mortgage adviser or broker to find out which lender is most likely to accept your application based on your individual circumstances.

What is the minimum credit score for a mortgage? 

There’s no set minimum credit score you need to achieve in order to get a mortgage. Generally speaking, the higher your credit score is, the easier you’ll find it to be accepted - and with lower interest rates.

It’s a good idea to always check your credit score before applying for any form of credit – including a mortgage. This allows you to see how likely you are to get accepted and gives you an idea of whether you need to work on improving it.

You can check your credit score online through the three main credit reference agencies in the UK: Experian, Equifax, and TransUnion. You can access your Equifax credit report for free (for life) through CredAbility.

8 ways to get a mortgage with bad credit 

Follow our eight steps to getting a mortgage if you have bad credit, to maximise your chances of finding a suitable deal.

1. Research bad credit mortgage lenders 

There are bad credit mortgage lenders who specialise in offering deals to people who are struggling to get accepted elsewhere. Research these using online but be wary of making a lot of applications, as this can harm your credit score further.

2. Consider using a bad credit mortgage broker or mortgage adviser 

Finding a bad credit mortgage broker will really help move your search along. These companies are experts in the mortgage market and specialise in advising people with a thin or poor credit history on how to get a mortgage.

3. Be open with lenders 

Bad credit mortgage lenders will probably want to know what circumstances led to the negative footprints on your credit history. Being open and honest with them can help support your application because it allows them to take external factors into account when making their decision.

4. Save a substantial deposit 

Saving for a larger deposit can offset some of the risk mortgage providers take when lending to someone with bad credit. This is because there’s less risk of you going into negative equity if house prices drop (where you owe more than your property is worth).

5. Consider getting a joint mortgage 

Getting a joint mortgage can either help or hinder your chances depending on the credit history of the person you’re applying with. If they have a high credit score the likelihood of getting accepted will increase because lenders take both people’s credit history into account. If they also have a poor credit history, then this could decrease your chances.

6. Consider using a guarantor 

A family member or close friend with a high credit score might be willing to help you out by being your guarantor. You’ll both need to fully understand the risks involved in this decision – if you stop making payments on your mortgage, your guarantor will be chased for the money. This could irreparably damage your relationship with them and negatively affect their finances too. 

7. Improve your credit history  

It might be worth building up your credit score first if you’re struggling to get accepted for a mortgage. There are several ways you can do this:

  • register on the electoral roll – as it gives lenders the peace of mind that they can contact you if they need to
  • check your credit report for errors – and make sure you ask the credit reference agency involved to fix them
  • add your name to household bills – and pay them on time and in full
  • remove old financial ties – especially if they have a bad credit history
  • register on the Rental Exchange Initiative – to build up your credit history by always paying rent on time
  • consider getting a credit rebuilder card – and pay off the balance in full and on time each month
  • set up direct debits for your bills and debt – so you never forget to make a payment
  • use savings to reduce your debt – and show lenders that you are a responsible borrower

8. Wait until negative markers drop off automatically 

If you’re not in a rush to get on the housing ladder it might be worth waiting until any negative markers drop off your credit report. This should allow you to access higher interest rates in the future.