Bad credit doesn't rule you out, but it narrows your options. Lenders care most about how recent the problem is and what type it was, so a missed phone bill three years ago is treated very differently to a default last month. Most adverse credit lenders want a bigger deposit, often 10% to 15%, and the rates are higher than high street deals.
You've seen the headline rates advertised by the big banks, you know your file has a default or two on it, and you assume that's the end of the conversation before it's even started. It isn't. A bad credit mortgage is a genuine, well-established part of the UK lending market, and thousands of people with exactly your kind of credit history buy their first home every year.
That doesn't mean it's identical to a standard application. You'll likely have fewer lenders to choose from, and the deposit or rate might look a little different to what a friend with a spotless file gets offered. But "different" and "impossible" are two very separate things, and understanding how the process actually works is the first step to getting your own front door.
The term "bad credit" (also known as adverse credit) covers a wider range of situations than most people expect. It's not just bankruptcy or huge unpaid debts. Lenders typically flag any of the following when they review your file:
It's worth knowing there's no single, universal credit score that lenders demand. Each credit reference agency, Experian, Equifax and TransUnion, scores you slightly differently, and individual lenders weigh that information against their own criteria. A mark that puts one lender off completely might barely register with another.
Three things work in your favour, even with a bad credit history.
Specialist lenders exist for exactly this. Alongside the household-name high street banks, there's a whole tier of lenders that specialise in adverse credit. Instead of relying purely on an automated credit score, they use manual underwriting, meaning a real person looks at your full circumstances: your income, how long ago the issue happened, and whether you've kept up with payments since. That human judgement often makes room for approval where a computer would have said no.
Time is genuinely on your side. Most negative marks fall off your credit file after six years, whether or not the debt was ever repaid. A default from seven years ago simply won't show up. Even within that six-year window, older and smaller issues are treated far more leniently than something recent and significant.
Your deposit does real work. A bigger deposit lowers the loan-to-value ratio, which reduces the lender's risk and can open up options that wouldn't otherwise be on the table. Some first-time buyers with credit issues can still access mortgages with a 5% deposit, though many lenders in this space will ask for 10% to 15%, depending on the nature and recency of the credit problem.
Lenders don't lump every credit issue into one category, and knowing where yours sits can help set realistic expectations.
Missed payments on a single credit card or phone bill, especially if it happened a while back and hasn't been repeated, tend to carry the least weight. Many mainstream lenders will overlook one or two isolated incidents once you're a couple of years past them.
Defaults are viewed a little more seriously, but a small, satisfied default from several years ago is a very different prospect to a large, recent, unpaid one. Some specialist lenders will disregard smaller defaults below a certain value entirely.
CCJs tend to concern high street lenders more than defaults do, particularly if they're unsatisfied. That said, a CCJ that's been paid off, especially for a modest amount, is often placeable with a specialist lender even before the six-year mark.
DMPs and IVAs sit further along the scale. An active IVA is one of the harder situations to get a mortgage against, since most lenders read it as an ongoing sign of financial strain. It's not automatically a dead end, but the pool of willing lenders shrinks considerably, and a bigger deposit tends to matter more here.
Discharged bankruptcy is treated on a sliding scale based on how long ago it was discharged. The further you are from it, and the cleaner your file has been since, the more doors reopen.
The common thread across all of these is that recency, severity and what you've done since matter far more than the label itself.
Once you move past the credit score itself, lenders are really asking one question: can you afford this, and will you keep paying it? To answer that, they'll typically look at:
Being upfront about your history, rather than hoping it won't come up, generally works in your favour. Underwriters are far more comfortable with a clear explanation than with something that looks like it was hidden.
There's a fair amount you can do before you even apply:
None of these guarantee approval on their own, but together they’ll help build a much stronger case.
This is one area where going it alone can genuinely cost you. A large part of the specialist bad credit lending market doesn't deal directly with the public at all, only through mortgage brokers. That means applying on your own limits you to a smaller pool of lenders from the start.
A mortgage broker who works regularly with adverse credit cases will also run a soft search first. Unlike a hard search, a soft search doesn't leave a mark on your file, so you can find out which lenders are likely to say yes before you commit to a formal application. That matters, because every declined hard application can make the next lender more cautious, even if the reasons behind it were reasonable.
If your credit history has knocked your confidence about buying your first home, you're not starting from a bad position, you're starting from a common one. At AB Mortgages, adverse credit is one of our core areas of specialist expertise, not an exception we occasionally deal with.
We run soft credit searches before we go anywhere near a formal application, so checking your options never puts your file at risk. Where a case is more complex, our team of specialist bad credit mortgage brokers take the time to understand the full story behind your credit history. CCJs, defaults, an IVA, a DMP, or discharged bankruptcy are all cases we place regularly, matching you with a lender whose criteria actually fit your circumstances rather than working against them.
If you're ready to find out where you stand, get in touch with AB Mortgages for a conversation about your options as a first-time buyer with bad credit.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Written by
Ashley has spent over 20 years in property, building and selling two estate agencies before founding the firm. He leads residential, buy-to-let and protection advice at AB Mortgages, and the complex, high value cases at AB Specialist Finance. His standard is simple: every client gets MD-level service.
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