Bad credit mortgages and ways to improve its credit score
Is a home loan still possible after a few missed payments, a default, or a CCJ?
In the UK, many borrowers in that position start by searching for bad credit mortgages. Revolution Finance Brokers notes that these deals often come with higher interest rates and tighter rules, because lenders look closely at credit history, a credit report, and existing debts.
This guide breaks down the main types of bad credit mortgage, what a mortgage broker and mortgage calculator can do, and the most reliable ways to improve a credit score and tidy up credit records.
It keeps things practical, so a buyer can turn a messy credit record into a plan that lenders are more likely to accept.
Key takeaways
- Bad credit mortgages often mean a higher APRC (annual percentage rate of charge), more fees, and tighter loan to value limits, with deposits commonly starting around 10% and rising to 20% to 30% for more serious or recent issues.
- In the UK, many serious negative markers sit on a credit report for six years, including defaults, CCJs, bankruptcy, and an IVA, so timing matters as much as the credit score itself.
- Payment history and credit utilisation both matter: Experian guidance often points to keeping credit card utilisation below 30% where possible, while still paying on time.
- A five-year fixed rate can reduce payment shock risk, and FCA rules also mean a fixed rate for the initial five years or more is treated differently in affordability stress testing.
- Small rate changes add up: on a standard repayment basis, a £100,000 mortgage over 20 years is about £506 a month at 2% interest, about £606 at 4%, and about £716 at 6%.
What are bad credit mortgages?
Bad credit mortgages let people with weaker credit scores, or past credit problems such as defaults, CCJs, or bankruptcy, apply for a mortgage when many prime mortgage lenders would decline.
Because the lender is taking on more risk, these deals often come with a higher APRC and stricter loan to value limits, plus a closer look at debts, income, and recent repayment behaviour.
Definition and purpose
A bad credit mortgage is a route to home finance for someone with missed payments, defaults, CCJs, or a past insolvency on their credit record.
Specialist mortgage lenders sometimes call these sub-prime mortgages, subprime mortgages, or adverse credit mortgages. The aim is simple: give a borrower a way onto the ladder now, with a realistic plan to refinance later once their credit scoring improves.
UK credit files usually show major negative events for six years. For example, a default typically stays on the credit report for six years from the default date, and a CCJ also stays for six years unless it is paid in full within one month (as listed by the UK credit reference agencies and lenders’ guidance).
Specialist lenders may accept higher risk, but they charge for it.
Credit checks, valuations, and affordability assessments still apply, and the Financial Conduct Authority expects fair treatment of customers in this market.
How they differ from standard mortgages
The biggest difference is pricing and access. A borrower may see fewer product options, higher interest rates, and stricter checks, even if their income looks strong.
Affordability is also tested more cautiously. The FCA’s interest rate stress test rule requires lenders to consider likely future rate rises for a minimum of five years, and it also states that if the initial rate is fixed for five years or more, no stress test is required for that part of the assessment.
Fees matter more too. The APRC is designed to show the annual cost of a mortgage over its lifetime, and it can include relevant charges and fees, not just the interest rate (per FCA guidance on APRC disclosures).
Finally, there is often a bigger risk of “reversion shock”, when a deal ends and moves to the lender’s standard variable rate. In an update effective 1 January 2026, Nationwide lists its Standard Mortgage Rate at 6.49%, which shows why many borrowers plan their remortgage well before a fixed period ends.
Types of bad credit mortgages
Bad credit mortgages are usually built around the same core product types as prime mortgages, but with stricter criteria and pricing that reflects risk.
The most common choices are fixed rate, tracker, and other variable rate deals. Each has a different balance of payment stability versus exposure to changing interest rates.
Quick comparison of product types
| Type | What happens to the interest rate | Why it can suit a bad credit borrower | Main watch-out |
| Fixed rate | Stays the same for an agreed period (often 2, 3, or 5 years) | Predictable repayments can make budgeting and affordability checks easier | Reverts to standard variable rate after the deal ends unless the borrower remortgages |
| Tracker | Moves up and down with a benchmark rate, plus a margin | Can fall if interest rates fall, and can be easier to exit on some products | Payments can rise quickly if rates go up |
| Standard variable rate | Set by the lender and can change at their discretion | May be a temporary “holding rate” while credit improves | Often higher than fixed deals, and changes are harder to predict |
Fixed-rate bad credit mortgages
A fixed-rate bad credit mortgage locks the interest rate for a set term, commonly 2, 3, or 5 years. Monthly repayments stay stable, which can make budgeting less stressful.
Rates are often higher than prime mortgages, and deposits can be larger. Still, a bigger deposit can sometimes improve the rate offered, because it lowers the loan to value and reduces the lender’s risk.
A steady payment record looks good to a lender.
Fixed deals need a plan for the end of the term. If the borrower does nothing, the mortgage commonly reverts to a standard variable rate, which can be costly.
- Before applying: check the credit report with all three main UK credit reference agencies (Experian, Equifax, and TransUnion) and dispute any errors.
- During the fix: focus on clean bank statement conduct, no returned payments, no unarranged overdrafts, and stable spending.
- 6 to 4 months before the deal ends: start reviewing remortgage options and run a mortgage calculator at higher interest rates to stress test the budget.
For savings held for a deposit, protection rules can also matter. The Bank of England explains that the FSCS deposit protection limit rose to £120,000 per person, per authorised firm from 1 December 2025, which can influence how a buyer holds a large deposit while they house hunt.
Variable-rate bad credit mortgages
Variable rate mortgages can rise or fall over time. That flexibility can help if interest rates fall, but it can punish a tight budget when rates rise.
A borrower considering a variable rate should plan for the “worst month”, not the “best month”. The lender will run affordability checks with rate rises in mind, and a mortgage calculator can help the borrower do the same at home.
It is also worth taking reversion rates seriously. As noted in Nationwide’s update effective 1 January 2026, its Standard Mortgage Rate is 6.49%, which is a practical reminder that standard variable rate pricing can be a jump from a short fixed deal.
- Build a buffer for household expenses, including car finance, childcare, and energy bills, not just the mortgage repayments.
- Keep other debts moving down, so the debt-to-income ratio improves while the mortgage is running.
- Avoid interest only mortgage options unless there is a clear, credible repayment strategy, because the balance does not reduce on its own.
Can you get a mortgage with bad credit?
Yes, a borrower can sometimes get a mortgage with bad credit in the UK, but the lender will ask more questions and may offer fewer options.
The key is showing that the credit issue is either historic, clearly explained, or already resolved, and that the borrower’s recent finances are stable and affordable.
Factors lenders consider
Mortgage lenders tend to focus on three areas: the credit history, the current affordability picture, and the “story” told by the last few months of bank statements.
- Credit history: missed payments, defaults, CCJs, arrears, and how recently they happened, plus whether they are marked as settled or satisfied.
- Income and stability: payslips, employment type, and consistency of earnings, including how variable income is evidenced.
- Affordability: existing debts, credit card balances, and regular deductions from income, measured against mortgage repayments under a stress test.
- Deposit size and source: how much the borrower has saved and where it came from, including any gifted deposit checks.
- Recent conduct: signs of financial strain like gambling spend, repeated overdraft use, or returned direct debits.
- Property value and valuation: the survey valuation can cap how much can be borrowed, even if the buyer offers more.
Each lender’s credit scoring is different, but published criteria can give useful clues. For example, Pepper Money’s published mortgage criteria states it will not accept CCJs or defaults registered in the last six months for parts of its range, and it also lists conditions around payday loans and insolvency timeframes.
Importance of deposit size
A deposit does two jobs. It reduces the loan to value, and it signals that the borrower can save consistently, which many underwriters like to see.
Loan to value is simply the mortgage amount divided by the property value. A £180,000 mortgage on a £240,000 home is a 75% loan to value, which often opens more product options than 90% or 95%.
| Deposit | Loan to value | What it can mean in practice |
| 5% | 95% | Often priced higher, and can be limited if the credit record has recent adverse entries |
| 10% | 90% | More choice than 95%, and can be a realistic target for milder issues |
| 15% | 85% | A common stepping stone where there are older defaults or CCJs |
| 20% to 30% | 80% to 70% | Often used to offset recent or more serious issues like mortgage arrears, bankruptcy, or an IVA |
A borrower who cannot raise a larger deposit sometimes uses a guarantor arrangement, but that is a major commitment for the guarantor. A mortgage broker can explain whether guarantor loans are realistic, and whether a bigger deposit would remove the need.
Ways to improve your credit score
Improving a credit score is rarely about one magic move. It is more like stacking small wins across payment history, debts, and the accuracy of the credit report.
In the UK, it also helps to check credit records across more than one credit reference agency, because lenders do not all use the same data source.
Pay bills on time
On-time repayments are one of the clearest signals lenders look for. Late payments, defaults, and arrears can drag down credit scores, and defaults can remain visible for six years from the default date.
Setting up a direct debit is often the simplest fix, because it removes the “forgotten payment” risk.
- Put all priority bills on direct debit, starting with utilities, council tax, and credit card minimum payments.
- Choose a payment date just after payday, so the money is there when the direct debit collects.
- If a payment will be missed, contact the provider early and agree a plan, rather than letting it fall into arrears.
Reduce existing debt
Lower balances can improve affordability and credit scoring at the same time. Credit utilisation matters too, which is the percentage of a credit limit being used.
Experian guidance often suggests keeping credit card utilisation below 30% where possible, and Equifax also highlights that staying under 25% is viewed as good practice.
- Target the highest-cost debt first: payday loans and high-APR credit cards can drain monthly cash flow fast.
- Keep a buffer: even a small emergency fund can stop a new missed payment when an unexpected bill lands.
- Time payments thoughtfully: paying down a balance before the statement date can reduce the balance that gets reported on the credit report.
If the debt picture feels unmanageable, free UK debt advice from organisations such as Revolution Finance Brokers can help map out options like debt consolidation, without guessing.
Avoid unnecessary credit applications
Multiple applications in a short period can make a lender nervous, and hard searches can drag down credit scores for a while.
Experian explains that soft searches, such as eligibility checks, are not visible to lenders and do not impact the credit score, while hard searches are recorded and can affect scores for around six months.
- Space out applications, especially in the six months before applying for a mortgage.
- Use eligibility tools that run a soft search before making a full application.
- Keep older accounts in good standing, since account age can support stronger credit history.
If a borrower needs to explain past issues, a Notice of Correction can help. Experian states this statement must be no longer than 200 words, and lenders should take it into account, although it can slow the application process because it may trigger manual review.
Benefits of improving your credit score
A stronger credit score can reduce mortgage rates, widen product choice, and make remortgaging easier later. It can also reduce the need for workarounds like guarantor loans.
It is not just about “passing a credit check”. Better credit scoring can also change the price paid for borrowing across the whole mortgage term.
Better mortgage rates
Lower interest rates can change monthly repayments and total mortgage debt in a big way. A mortgage calculator makes this real in seconds.
| Loan example | Interest rate | Approx monthly repayment | Approx interest paid over 20 years |
| £100,000 over 20 years | 2% | £506 | £21,412 |
| £100,000 over 20 years | 4% | £606 | £45,435 |
| £100,000 over 20 years | 6% | £716 | £71,943 |
Even a 2% rate difference can mean roughly £210 extra each month on a £100,000, 20-year repayment mortgage.
APRC can help compare deals because it includes certain fees and charges, not just the headline interest rate. That matters for bad credit mortgages, where fees can be a bigger part of the price.
Increased loan approval chances
Approval odds improve when the credit report is accurate, recent payments are clean, debts are under control, and the deposit supports a safer loan to value band.
Registering on the electoral roll can help too. Experian notes that electoral roll details usually appear on a credit report within around 30 days, with seasonal timing quirks around the annual canvass that can delay updates until 1 December.
After a few months of stable conduct, more mortgage lenders may be willing to look at a case, including mainstream options that previously said no.
Conclusion
Bad credit mortgages can still be possible in the UK, but the borrower should expect tighter checks, higher interest rates, and a stronger focus on recent financial behaviour.
A clean credit report, a realistic deposit, and a clear budget can make a bigger difference than guesswork or rushed applications.
Small habits, such as paying bills on time, reducing debts, and spacing out credit checks, can lift credit scores and open better deals over time.
With the right plan, a bad credit mortgage can become a stepping stone to remortgaging on better terms later.
FAQs
- What are bad credit mortgages?
Bad credit mortgages are home loans for people with low credit scores, offered by specialist firms, or mainstream financial institutions. They often need a larger deposit, and the interest rates can be higher.
- Can I get a mortgage with bad credit?
Yes, you can get mortgages with bad credit, but you may face higher rates, and stricter checks. Shop around, and consider a bigger deposit, or a guarantor.
- How can I improve my credit score?
Start by checking your credit report, and fix any mistakes. Pay bills on time, cut down balances, and avoid new debt, these are the main ways to improve your credit score. Use a small revolving account to build credit slowly, baby steps win.
- How long before my credit score helps me get a mortgage?
Small gains can show in a few months, but solid change often takes a year or more. For bad credit mortgages, lenders look for steady improvement, typically over six to twelve months.