I Have a Poor Credit History, Can I Still Get a Mortgage?
- Adrian Collins
- Sep 22
- 5 min read
Updated: Oct 24
Yes, there is a strongly possibility you can! Navigating mortgages can be daunting at the best of times and this is especially true when your credit score isn’t perfect. If you have a poor credit history, securing a mortgage might seem challenging, but several options can help you achieve your dream of homeownership. Here's a breakdown of what you need to know about poor credit mortgages and how you can improve your mortgage approval chances.
What Constitutes Poor Credit History and How Do Lenders View This?
Poor credit typically stems from a history of late payments, loan defaults, or something as simple as numerous credit searches. These actions signal to lenders that you might present a higher credit risk, often resulting in higher interest rates and stricter loan conditions. Understanding your credit report and knowing how it impacts your mortgage eligibility is the first step toward correcting these issues.
What Causes Poor Credit and How Can You Avoid Them?
As noted above, poor credit usually happens because of missed payments, high credit card balances, or applying for multiple loans at once. To avoid this, try to pay bills on time, keep your credit utilisation low, and only apply for credit when necessary. Good habits now can help improve your score over time.
Steps to Better Understand Your Credit Report
Obtain Your Credit Reports from Major Credit Bureaus:
Request copies of your credit report from the main credit bureaus (such as Experian, Equifax, and TransUnion). CheckMyFile allows you to view all three reports in one place, making it easier to assess your credit profile. The initial report is free, however a monthly charge will apply for ongoing access & monitoring.
Check for Errors and Discrepancies:
Look for inaccuracies such as incorrect personal information, wrong account details, or outdated negative entries. Discrepancies can lower your credit score unjustly and should be disputed with the credit bureau.
Check Your Payment History:
Look at your records for missed payments, unpaid bills, or accounts marked as late. Knowing where you've had problems helps you see what needs fixing.
Monitor Your Credit Utilisation Rate:
Your credit utilisation ratio (how much credit you’re using compared to your credit limit) significantly impacts your score. Aim to keep it below 30% for a healthier score.
Identify Old or Unnecessary Accounts:
Closing outdated or unused accounts can improve your credit profile. Also, ensure that historical negative marks are indeed accurate and not outdated (most negative marks are removed after a certain period, typically 7-10 years).
Create a Credit Improvement Plan:
Based on what you find, develop a plan to address negative issues, such as paying off debts, setting up automatic payments, or consolidating high-interest debt.
Seek Professional Advice if Needed:
If you're unsure how to interpret your credit report or how to improve your score, consider consulting a mortgage adviser or credit counsellor. They can provide personalised guidance.
By actively reviewing and understanding your credit report, you can identify the specific factors affecting your creditworthiness and take targeted steps to improve your credit score, ultimately increasing your chances of mortgage approval on favourable terms.
How Long Do Negative Marks Stay on Your Credit Report?
Negative marks like missed payments or defaults can stay on your report for up to six years, depending on the type. Over time, positive financial behaviour can help your score recover, making it easier to get a mortgage with better rates in the future.
Top Tips for Building Your Credit Score Fast Before Applying for a Mortgage
Follow these essential tips to boost your credit score quickly before applying for a mortgage:
Pay all bills, including utilities and loans, on time each month to demonstrate reliability to lenders.
Keep credit card balances low and avoid maxing them out to improve your credit utilisation rate.
Refrain from taking on new credit unless absolutely necessary, as multiple new accounts can negatively impact your credit score.
Checking your report for errors and disputing inaccuracies can also boost your score and improve your chances of mortgage approval.
What are my Mortgage Options if I have a Poor Credit History?
There are specialised mortgage products designed for borrowers with less-than-perfect credit scores. Known as poor credit mortgages, adverse credit mortgages, or sub-prime loans, these options can provide a pathway to homeownership despite credit challenges. While they come with higher interest rates and may require a larger deposit (maybe as high as 20-25% of the property's value), they can be suitable for those keen to buy now.
How Can I Improve My Credit Score and Secure a Better Mortgage?
Improving your credit score is key to securing a better mortgage. Follow these effective tips to boost your creditworthiness and increase your chances of approval:
Consistent Payments: Make sure to pay all your bills on time to establish a reliable payment history.
Debt Reduction: Focus on reducing existing debt, which can positively impact your credit score.
Credit Report Check: Regularly check your credit report for errors or inaccuracies and dispute any discrepancies.
Apply for New Credit Sparingly: Each new credit application can temporarily lower your credit score, so be selective and strategic.
Add a Correction Note: Include a personal statement explaining past financial missteps due to extraordinary circumstances like medical emergencies or perhaps relationship breakdown.
Close Unused Credit Cards: known as ‘open credit’, lenders do not like to see hefty unused credit cards, so it’s advisable to close cards that you no longer need.
Increased Support from Mainstream Lenders
Many mainstream lenders are now more willing to consider borrowers with small credit blips, like missed utility or mobile phone payments, which are often seen as minor setbacks. This means it’s worth speaking to a mortgage broker as they will find suitable lenders who offer better terms for those with minor credit setbacks. By exploring your options, you’ll have a better chance of securing a mortgage despite a less-than-perfect credit history.
Present Yourself as a Reliable Borrower to Lenders
Transparency and preparation are key. Provide complete documentation, including pay slips and bank statements, to present to potential lenders.
Consider a using a family member to stand with you on your mortgage, providing some additional assurance to lenders. For more on this visit our article Joint Borrower Sole Proprietor Mortgages.
Why Using a Mortgage Broker Can Help Borrowers with Poor Credit
A mortgage broker knows which lenders are more flexible with credit issues. They can help you find suitable options, whether from mainstream lenders or specialists, making it more likely you'll get accepted. While they don’t guarantee a lower rate, they make the process easier and help you explore the best options available for your situation.
By understanding poor credit mortgages and applying these practical tips, you can enhance your chances of securing a mortgage, even with a challenging credit history.
Ready to explore your options?
Your home may be repossessed if you do not keep up repayments on your mortgage.
Published by Adrian Collins, Founder of Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
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