Bad credit means one of two things. Either you have a bad credit score or rating.

A bad credit rating is the number that credit reference agencies (CRAs) give you. A high credit score can improve your mortgage options, while a low one will reduce them. In the UK, the top CRAs are Equifax, Experian, and TransUnion. Each one has its own scoring system. You can usually improve your credit rating just by linking your accounts to each of them.

What’s a bad credit score?

What constitutes a bad score depends on which CRA you look at:

Rating	TransUnion	Experian	Equifax
Excellent	628 to 628	961 to 999	466 to 700
Good	604 to 627	881 to 960	420 to 465
Fair	566 to 603	721 to 880	380 to 419
Poor	562 to 565	561 to 720	280 to 379
Very Poor	0 to 550	0 to 561	0 to 279

 

You may be able to still get a mortgage if your score is poor or fair. If it’s very poor, however, you are unlikely to be offered mortgage options.

How bad credit changes your mortgage eligibility

If you do get a mortgage with bad credit, these are the ways your poor credit history will impact your offers:

1. Higher interest rates
2. Smaller loan amounts
3. Larger deposit requirements
4. Fewer options

 

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

Can you get a mortgage with bad credit? Yes, it’s possible. You will want to aim to have a fair or as close to fair as possible score if you have a poor score. If you have a reason for your poor credit rating, then include it, as this may impact your application. Just note there is no guarantee the lender will care either way. You might have a poor credit rating because of identity theft and still may struggle to get a mortgage even if before the theft you had an excellent rating.

Can you get a mortgage with a bad credit history?

If you’re worrying yourself about “how do I get a mortgage with a bad credit history?” then stop. There are ways you can get around a short credit history. The answer is to show additional financial data, especially if it’s from another country where UK lenders and CRAs won’t have access.

How to get a mortgage with bad credit

It’s very important that you know how to get a mortgage with a bad credit history in advance. This can help set your expectations, give you a better idea of what to expect, and, most importantly, help you clean up and polish your application.

You essentially need to prove that the reason you have bad credit is in the past. If you frequently miss repayments, change work regularly, move regularly, and don’t have much in savings, not even a bad credit mortgage will be available to you.

Technically, these steps will work better if your issue isn’t so much your credit rating but your credit history. You may not have a credit history because you don’t have a credit card, or you may have just moved to the UK. In those cases, you can increase your chances of getting a bad credit mortgage by following these steps:

1. Show you’ve been making regular payments (utility, credit card, phone bill, etc).
2. Reduce your costs and keep outgoings as consistent as possible.
3. Review your credit report regularly and make sure it’s accurate and up-to-date. Correct issues if they appear.
4. Add a note if you have a good reason for past financial difficulties. You might have missed repayments on a loan because you were recovering from a bad car accident and were in the hospital, for example.
5. Get a guarantor who does have good credit. This reassures lenders that someone, even if it’s not you, will make the repayment.
6. Build up a substantial deposit of a minimum of 20% of the property price or more.
7. Use a broker to find mortgage products from lenders around the UK.

Frequently asked questions

·         Can I get a mortgage with bad credit quickly?

If you’ve asked yourself, “can I get a mortgage with bad credit quickly?” then you may need to reset your expectations. If you have bad credit, you’ll likely be put through stricter and more thorough financial and affordability checks. This can mean your mortgage application takes longer to go through.

 

·         How can I get a mortgage with a bad credit history?

Another big question aspiring homeowners ask themselves is, “how can I get a mortgage with bad credit?” and if there’s anything they can do to improve their chances. Having good records can help. If you can prove that you can afford the mortgage, don’t have outstanding debts, and are otherwise good with money, you’re more likely to be accepted.

This means that if you defaulted on a loan once ages ago, and it hurt your credit score, and you’ve been slowly working your way back up, you may still be able to get a mortgage.

·         How can I improve my bad credit?

In some cases, your mortgage application will be rejected. If rejected, you’ll need to wait at least six months before you can try again. In that time, you will want to:

• Get on the electoral roll
• Use and pay off your credit card
• Keep credit card utilisation under 50%
• Make repayments on time every time
• Consider a credit builder card
• Get a financial advisor to help you manage debts

This is just a quick-fire list of what you can do to improve your credit rating. If you are struggling with debts you must deal with those first. If you cannot afford a mortgage, lenders will not offer you one.

·         Is it better to wait for a mortgage?

You may find it’s better to wait, build up your credit score and history, and save instead of trying to get a mortgage with bad credit. A larger deposit and a great credit score can lower your interest rate and increase the number of mortgage products you have available.