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MortgageOS
Credit Guide

Mortgage Declined for Credit Issues? Your Next Steps

Understanding why credit issues caused your decline, what you can do about it, and how to successfully get a mortgage despite past credit problems.

Updated January 202612 min read

Common Credit Decline Reasons

When a mortgage application is declined for credit reasons, it's usually due to one or more of these issues appearing on your credit file. Understanding exactly what caused your decline is the first step to fixing it.

Missed Payments

Late or missed payments on credit cards, loans, or bills are recorded on your credit file. Even one missed payment can be flagged, with recent misses carrying more weight than older ones.

Impact: High for recent misses (last 12 months). Reduces over time.

Defaults

A default is registered when you've significantly fallen behind on payments (typically 3-6 months). It's more serious than a missed payment and stays on file for 6 years.

Impact: Significant. Many mainstream lenders require no defaults in 3+ years.

County Court Judgments (CCJs)

A CCJ is a court order to repay a debt. Even small amounts are taken seriously. Satisfied (paid) CCJs are viewed more favorably than unsatisfied ones.

Impact: High. Most lenders need CCJs to be 3+ years old and satisfied.

High Credit Utilization

Using a high percentage of available credit (especially over 50-75% of credit card limits) signals financial stress to lenders, even if you're making minimum payments.

Impact: Moderate. Can be fixed quickly by paying down balances.

Too Many Credit Applications

Each credit application leaves a "hard search" footprint. Multiple applications in a short period suggest financial difficulty or desperation for credit.

Impact: Moderate. Footprints visible for 12 months, gone after 2 years.

Bankruptcy or IVA

Bankruptcy stays on file for 6 years from discharge date. Individual Voluntary Arrangements (IVAs) remain for 6 years from start date. Both significantly limit options.

Impact: Very high. Specialist lenders only until discharged/completed.

Know your exact issue

Lenders often give vague reasons like "credit scoring" for declines. Get your full credit report from all three agencies (Experian, Equifax, TransUnion) to see exactly what's on file. Each agency may hold different information.

How Long Issues Stay on File

Most negative credit marks remain on your file for 6 years. However, their impact reduces over time, and different lenders have different tolerance thresholds.

Credit File Retention Periods

Missed payments6 years from date of miss
Defaults6 years from date registered
CCJs6 years from judgment date
Bankruptcy6 years from discharge date
IVA6 years from start date
Hard searchesVisible 12 months, removed after 2 years
Debt management plans6 years from start date

Impact Reduces Over Time

0-12

months

Highest impact. Very limited options.

1-3

years

Specialist lenders available. Higher rates.

3-6

years

More options open up. Near-mainstream rates possible.

CCJ satisfaction tip

If you pay a CCJ within 30 days of the judgment, you can apply to have it removed from your credit file entirely. After 30 days, paying it marks it as "satisfied" but it still remains visible for the full 6 years.

Rebuilding Your Credit

Rebuilding credit takes time, but there are practical steps you can take to improve your profile while waiting for negative marks to age.

1. Get on the Electoral Roll

Being registered at your current address improves your credit score and helps lenders verify your identity. This is a quick win that many people overlook.

Timeline: Immediate effect once registered

2. Pay Down Existing Credit

Reduce credit card balances to under 30% of your limit. This improves your utilization ratio, which is a significant factor in credit scoring.

Timeline: Score improves within 1-2 months of reduction

3. Use a Credit Builder Card

A credit builder card with a small limit, used for a regular purchase and paid off in full each month, demonstrates responsible credit management.

Timeline: 3-6 months of perfect use shows positive pattern

4. Maintain Address Stability

Lenders prefer applicants who have been at the same address for 3+ years. If you've recently moved, ensure all credit accounts reflect your new address.

Timeline: Ongoing benefit over time

5. Check for Errors

Review your credit reports for errors: wrong addresses, accounts that aren't yours, incorrect payment statuses. Dispute any errors with the credit agencies.

Timeline: Disputes typically resolved within 28 days

6. Sever Problem Financial Links

Joint accounts or financial associations with people who have poor credit can affect your score. Close joint accounts with ex-partners if no longer needed and request a "notice of disassociation" from credit agencies.

Timeline: Effect within 1-2 months after disassociation

Realistic timeline

Meaningful credit improvement typically takes 6-12 months of consistent positive behavior. Quick-fix "credit repair" services are often ineffective and sometimes scams. Focus on genuine improvement over time.

Specialist Lenders

Specialist lenders (sometimes called "adverse credit" or "sub-prime" lenders) use different criteria than high street banks. They're designed for applicants with credit issues that mainstream lenders won't accept.

How Specialist Lenders Differ

Mainstream Lenders

  • Automated credit scoring
  • Strict criteria cutoffs
  • Limited flexibility
  • Lower interest rates
  • No recent adverse credit

Specialist Lenders

  • Manual underwriting
  • Case-by-case assessment
  • Context considered
  • Higher interest rates
  • Accept various credit issues

What Specialist Lenders May Accept

More Commonly Accepted

  • Satisfied defaults over 12-24 months old
  • Satisfied CCJs over 12-24 months old
  • Older missed payments with recent clean history
  • Explained one-off issues with evidence

Possible With Right Lender

  • Unsatisfied defaults (may need higher deposit)
  • Recent CCJs with strong explanation
  • Discharged bankruptcy (usually need 2+ years post-discharge)
  • Completed IVA (typically need 1+ year post-completion)

Rarely Accepted

  • Current IVA or active debt management plan
  • Undischarged bankruptcy
  • Very recent unsatisfied CCJs
  • Pattern of ongoing defaults

Higher rates are temporary

Specialist lender rates are typically 1-3% higher than mainstream. Many borrowers use specialist lenders as a stepping stone, remortgaging to a mainstream lender after 2-3 years when their credit has improved and adverse marks have aged.

Alternative Options

Beyond specialist lenders, there are other routes to homeownership when you have credit issues.

Guarantor Mortgages

A family member (usually a parent) guarantees your mortgage, using their income or property as additional security. This can help you access mainstream rates despite credit issues.

Considerations: The guarantor takes on significant risk. If you can't pay, they become liable. Their property could be at risk.

Joint Borrower Sole Proprietor (JBSP)

A family member joins the mortgage for affordability purposes but isn't on the property deeds. Sometimes easier than a traditional guarantor mortgage.

Note: Some lenders offering JBSP are more flexible on credit issues when the additional borrower has a clean file.

Government Schemes

Some government homeownership schemes may be accessible even with credit issues:

  • Shared Ownership: Buy a share (25-75%) and pay rent on the rest. Lower mortgage amount needed may expand lender options.
  • First Homes: Discount scheme for first-time buyers. Still requires mortgage approval, but lower amounts may help.
  • Right to Buy: Council tenants may get significant discount, reducing loan-to-value and improving approval chances.

Reality check: Government schemes still require mortgage approval. They can help by reducing the loan amount needed, but you'll still need to meet a lender's credit criteria.

Larger Deposit

A larger deposit (lower loan-to-value) significantly expands your lender options. Moving from 90% LTV to 75% LTV opens many more doors for adverse credit applicants.

Source of deposit: Gifted deposits from family are acceptable to most lenders. Borrowed deposits (loans) typically are not.

What NOT to Do After a Decline

After a mortgage decline, your next actions are crucial. Avoid these common mistakes that can make your situation worse.

Don't Apply to Multiple Lenders Immediately

Each application creates a hard search on your credit file. Multiple searches in a short period look like desperation and will further reduce your chances. Take time to understand why you were declined first.

Don't Apply for New Credit

Avoid taking out new credit cards, loans, or buy-now-pay-later products while you're trying to get a mortgage. New credit increases your commitments and adds more searches to your file.

Don't Close All Credit Accounts

Counterintuitively, having no credit can be as problematic as bad credit. Keeping one or two accounts with low utilization and perfect payment history is better than having no credit footprint.

Don't Use "Credit Repair" Companies

Companies promising quick credit fixes are often scams or at best ineffective. Legitimate credit improvement takes time. Anything you can do, you can do yourself for free by contacting credit agencies directly.

Don't Hide Information from Your Broker

If you use a broker, be completely honest about your credit history. They can only help you if they know the full picture. Surprises during underwriting lead to declines and wasted time.

Wait, then act strategically

After a decline, wait at least 30 days before your next application. Use that time to check your credit reports, understand the specific issue, and target a lender whose criteria you're confident you meet.

Self-Employed Considerations

Self-employed applicants face unique challenges when business issues affect personal credit. Lenders may look at both your personal credit and your business's financial health.

Business Issues That Affect Personal Credit

  • Personal guarantees: If you've personally guaranteed business loans or credit, defaults appear on your personal credit file.
  • Director's loan accounts: Overdrawn director's loan accounts can be viewed as personal debt by some lenders.
  • HMRC debts: Outstanding personal tax liabilities (self-assessment) or company tax debts you've guaranteed can lead to CCJs.
  • Trade credit in personal name: Business supplies or services in your personal name become personal debts if unpaid.

When Business Closure Causes Credit Issues

If a previous business failed and left debts, lenders want to understand:

  • How long ago the business closed
  • Whether debts have been satisfied
  • Your current business stability
  • Whether circumstances were exceptional (recession, pandemic, etc.)

Positive factors: Showing that your current business is stable, profitable, and completely separate from the failed venture helps significantly.

Company Accounts vs Personal Credit

Limited company directors often ask whether company issues affect personal credit. The short answer: sometimes.

  • Company credit is separate — a company's poor payment history doesn't directly appear on your personal file.
  • But personal guarantees bridge this gap — most business credit requires director guarantees, making you personally liable.
  • Some lenders check company filings — late accounts filing or poor company credit scores may raise questions even without personal liability.

Specialist self-employed brokers

Brokers who specialize in self-employed mortgages understand the overlap between business and personal credit. They can explain unusual credit patterns to underwriters in context, which can make the difference between approval and decline.

Working With a Broker

After a credit-related decline, working with an experienced broker becomes especially valuable. They can navigate the specialist lender market and present your case effectively.

What a Good Broker Does

  • Reviews your full credit file — understands exactly what lenders will see and identifies specific issues.
  • Matches you to appropriate lenders — knows which specialist lenders accept your specific credit profile.
  • Uses soft searches first — checks eligibility without leaving hard footprints on your credit file.
  • Presents your case effectively — explains context behind credit issues to underwriters in the best light.
  • Negotiates on your behalf — may get exceptions or better terms based on the full picture.

Finding the Right Broker

Not all brokers are equal for adverse credit cases. Look for:

  • Experience with adverse credit or "specialist" mortgages
  • Whole-of-market access (not tied to specific lenders)
  • Willingness to review your credit before charging fees
  • Clear explanation of realistic options and timeline
  • FCA authorization (check the FCA register)

Questions to Ask

  • "How many adverse credit cases do you handle per month?"
  • "Which specialist lenders do you have experience with?"
  • "Will you review my credit file before I commit to anything?"
  • "What are realistic timelines and rate expectations for my situation?"
  • "Do you charge upfront fees or only on completion?"

Get specialist guidance

Connect with brokers who understand credit issues and can help you find the right path to homeownership.

Get help

Frequently asked questions