Can You Buy a House With Bad Credit in the UK?

What "bad credit" means to a lender

Mortgage lenders look at your credit file from the three main credit reference agencies (Experian, Equifax, TransUnion). They focus on:

1. Defaults: missed payments that resulted in the lender writing off the debt

2. County Court Judgments (CCJs): court judgments for unpaid debt

3. IVAs and bankruptcy: formal insolvency arrangements

4. Late payments: missed payments that did not result in default

5. High credit utilisation: high balances on credit cards relative to limits

6. Frequent credit applications: multiple recent applications for credit

Each affects your application differently and lenders weight them differently.

Lender appetite by credit issue

The general rule: high street lenders want clean files, specialist lenders accept progressively worse files at progressively higher rates.

Rates by credit profile

Specialist mortgages cost more than mainstream products. Typical 2026 rates:

• Clean credit: 4.5% to 5.0% (high street rates)
• 1 to 2 small issues, settled: 5.0% to 5.5%
• Multiple settled defaults more than 2 years old: 5.5% to 6.5%
• Recent settled CCJ or default: 6.0% to 7.5%
• Active CCJ or default: 7.0% to 9.0%

The premium for bad credit is typically 0.5% to 3.0% above mainstream rates. Over a 5-year fixed term on a £200,000 mortgage, that is £5,000 to £30,000 in extra interest.

How to improve your chances

1. Check your credit file

Get your credit file from all three agencies (Experian, Equifax, TransUnion). Each offers a free or low-cost option. Look for errors, defaults you did not know about, and accounts that should have closed.

2. Fix errors

Disputes can be raised directly with the agency. Errors are corrected within 28 days in most cases. Even small fixes can move your score up a band.

3. Settle outstanding defaults

Settling a default does not remove it but it changes the status from "active" to "settled" which is much better for mortgage purposes. Many lenders will not lend on active defaults but will lend on settled ones.

4. Pay down credit card balances

Aim for under 30% of your limit on each card. High utilisation hurts your score.

5. Avoid new credit applications

Each new application leaves a footprint. Avoid new credit cards, loans, or store finance in the 6 months before your mortgage application.

6. Get on the electoral roll

The electoral roll is one of the strongest positive signals on a credit file. Make sure you are registered at your current address.

7. Build positive payment history

Make every payment on time for at least 6 to 12 months before applying. Recent positive history matters more than older history.

8. Use a specialist broker

Adverse credit mortgages are a specialist market. A broker who knows the specialist lenders can match you to a lender willing to accept your file. The broker fee is worth paying.

Bigger deposit helps

A larger deposit (and lower LTV) opens up more lenders and lower rates regardless of credit history. If you can save another 10% to take your LTV from 95% to 85%, you will see significantly more lender options and lower rates.

For buyers with bad credit, a 25% deposit is the threshold at which many specialist lenders open up. Below 25% the options narrow significantly.

Verify the property too

Before any application, search the property on Property Passport UK at [/search](/search) to confirm tenure, EPC rating, and other facts that affect mortgageability. Specialist lenders are even more sensitive to property risk than mainstream lenders, so flagging any issue early (Flood Zone 3, sub-80-year lease, F or G EPC) helps the broker target the right lender.

Look up any UK property on Property Passport UK

Property Passport UK is the national property data registry for England and Wales. Verified data on every one of the 19.35 million properties from HM Land Registry, the EPC Register, Ordnance Survey, and the Environment Agency. Free, no account required. Search any address at [/search](/search).