Bad credit makes buying a house harder. It does not make it impossible — and the gap between those two statements is where most of the practical guidance lies.
According to Pepper Money’s 2025/26 Specialist Lending Study, 9.26 million UK adults — 17% of the population — have experienced adverse credit in the last three years. The majority of them assume they cannot get a mortgage. Many of them are wrong. The lender landscape in 2026 includes a substantial specialist market specifically designed for borrowers whose credit file is less than clean, and the difference between what a high street lender will do and what a specialist lender will do is often significant.
This guide explains what lenders actually look at, what types of credit problems affect applications differently, what specialist options exist, and what steps genuinely improve your position.
What Lenders Actually Look At
Bad credit is not a single category. Lenders assess a credit file in detail, and the type, severity, recency, and pattern of credit problems are all relevant to their decision.
The factors that make the biggest difference are:
Recency. A missed payment from five years ago carries far less weight than one from six months ago. Most lenders are most concerned with the last 12 to 24 months of credit conduct. Problems further in the past, particularly if followed by a period of clean conduct, have diminishing impact.
Severity. There is a spectrum from minor to severe. At the minor end: a few missed or late payments, a small default since satisfied. At the severe end: County Court Judgements (CCJs), Individual Voluntary Arrangements (IVAs), bankruptcy, or repossession. Mainstream lenders are generally unwilling to look past the severe end. Specialist lenders have specific criteria for each category.
Whether issues are satisfied or outstanding. A satisfied default (one where the debt has since been paid) is viewed more favourably than an outstanding one. A registered CCJ that has since been satisfied is better than one that remains unsatisfied.
The explanation. Many lenders — particularly specialist ones — take a more human approach to underwriting. A credit problem caused by redundancy, bereavement, divorce, or ill health that has since been resolved is treated differently from a pattern of consistently poor financial management. Being able to explain the context of credit issues, and to demonstrate that circumstances have improved, genuinely matters.
Types of Credit Problems and What They Mean for a Mortgage
Missed or late payments — the most common and least severe form of adverse credit. A handful of late payments on credit cards or a phone contract, particularly from some time ago, will limit high street lender options but will not prevent a mortgage with the right specialist lender.
Defaults — occur when a creditor marks an account as in default, typically after several missed payments. Defaults stay on your credit file for six years from the date of default. A satisfied default is better than an unsatisfied one, and an older default is better than a recent one. Some specialist lenders will consider defaults under a certain value, or defaults over a certain age, without significant rate penalty.
County Court Judgements (CCJs) — issued when a creditor obtains a court order for repayment of a debt. CCJs are serious but not a blanket bar on mortgage lending. Specialist lenders consider CCJs on a case-by-case basis, looking at the value, age, and whether they have been satisfied. Some lenders will not consider a CCJ registered within the last 12 months; others will consider satisfied CCJs of any age.
IVA (Individual Voluntary Arrangement) — a formal arrangement to repay debts over a defined period, agreed between a debtor and creditors. An active IVA makes mortgage lending very difficult. A completed and satisfied IVA, particularly one that concluded several years ago, does not automatically prevent a mortgage with a specialist lender, provided deposit and income conditions are met.
Bankruptcy — the most severe adverse credit event on a credit file. Most lenders require a defined period post-discharge (typically two to three years at minimum for specialist lenders) and evidence of rebuilt financial stability. Mainstream lenders rarely consider applications until six or more years post-discharge.
Deposit Size: The Most Controllable Factor
Regardless of the type of credit issue, a larger deposit materially improves the range of lenders and rates available.
With bad credit, a 10% deposit may be the minimum some specialist lenders will consider. A 15% to 20% deposit opens meaningfully more options and better rates. At 25% or above, some lenders who would not previously have considered the application will do so, because the lower loan-to-value reduces their risk exposure significantly.
The relationship between deposit size and lending accessibility with adverse credit is not subtle — every additional percentage point of deposit can expand the pool of available lenders and reduce the rate applied. If buying is not immediately possible at current deposit levels, the most productive focus is often on deposit accumulation alongside credit repair, rather than pushing an application that will only attract the least competitive terms.
What a Specialist Mortgage Broker Can Do
This is the most important practical point in this guide: if you have adverse credit and are considering a mortgage, using a specialist whole-of-market broker is not optional — it is the most important decision in the process.
Here is why:
- Specialist lenders — those who will consider CCJs, defaults, IVAs, and similar — do not always advertise widely on comparison sites. A broker who works in adverse credit knows which lenders will consider which specific combinations of credit issues.
- Applying to the wrong lender and being declined adds another search footprint to your credit file, which makes subsequent applications harder. A specialist broker identifies the right lender before any application is made.
- The way an application is presented — the explanation for credit issues, the structure of the case — affects the decision. Brokers with specialist adverse credit experience know how to present a case in the most favourable way.
- In Q4 2025, there were over 80,000 homeowner mortgages in arrears in the UK — meaning adverse credit is genuinely common, and the market infrastructure for dealing with it is well developed.
Read also- House buying process
What to Avoid
Making multiple mortgage applications without advice. Each full mortgage application creates a hard search on your credit file. Multiple hard searches in a short period signal financial distress to lenders and further damage your credit position. If you have adverse credit, do not apply to multiple lenders simultaneously — get advice first.
Applying to high street lenders if your credit issues are significant. High street banks have automated credit scoring systems that will reject applications with CCJs, defaults, or IVAs without human review. A specialist lender uses more nuanced underwriting. Applying to the wrong lender type wastes time and adds searches.
Ignoring credit report errors. A meaningful proportion of credit files contain errors — accounts attributed incorrectly, settled debts still showing as outstanding, electoral roll information that is out of date. Check your reports from all three main agencies — Experian, Equifax, and TransUnion — before any application. Errors can be corrected, and correcting them can materially improve your position.
For guidance on checking your credit file and correcting errors, check: MoneyHelper — checking your credit report
Steps That Genuinely Improve Your Credit Position
If you are not immediately in a position to buy, focused action over 6 to 12 months can substantially improve the range of lenders available to you.
- Register on the electoral roll at your current address. This is one of the simplest and quickest improvements to a credit file.
- Satisfy any outstanding defaults or CCJs where affordable. Satisfied adverse entries are treated more favourably than outstanding ones.
- Build recent positive credit conduct — a credit card used for regular small purchases and cleared in full each month demonstrates responsible current credit management.
- Avoid unnecessary credit applications in the months before a mortgage application. Multiple searches in a short period damage your file.
- Maintain all existing payments on time — including phone contracts, utility direct debits, and any existing credit facilities.
The goal is not a perfect credit file — that is neither necessary nor achievable if there is genuine adverse history. The goal is a pattern of recent responsible conduct that gives a specialist lender confidence in your current financial management.
For further guidance on mortgages with adverse credit, check: HomeOwners Alliance — bad credit mortgages
Conclusion
Bad credit does not prevent homeownership, but it does change the options available, the deposit required, and the rates you will be offered. The specialist lending market in 2026 is more developed than many people with adverse credit realise — and the first step to understanding your specific options is speaking to a specialist whole-of-market broker who has access to lenders that standard comparison sites do not show.
The most important actions are checking your credit file for errors, understanding exactly what is on it and why, saving the largest deposit you can, and not making multiple mortgage applications without advice. The path to homeownership with bad credit is often longer than without it — but for many borrowers, it is shorter than they assume.
Frequently Asked Questions
How much deposit do you need with bad credit?
Most specialist lenders require at least 10 to 15% deposit for applicants with adverse credit, compared to 5% that may be available to buyers with clean credit. A 20 to 25% deposit significantly expands the range of lenders and rates available. The larger the deposit, the lower the lender’s risk and the more favourable the terms.
Will a CCJ stop me getting a mortgage?
Not necessarily. Specialist lenders consider CCJs on a case-by-case basis. Key factors are the value of the CCJ, how recent it is, and whether it has been satisfied. Some lenders will not consider a CCJ registered within the last 12 months, while others will consider satisfied CCJs of any age alongside the rest of the application.
Should I use a mortgage broker if I have bad credit?
Yes — using a specialist whole-of-market broker is strongly advisable with adverse credit. Specialist lenders who consider CCJs, defaults, and IVAs do not always appear on comparison sites. A broker identifies the right lender before any application is made, avoiding the credit damage caused by multiple declined applications, and knows how to present a case in the most favourable way.
