Quick answer: Adverse credit means there are negative entries on your credit file. These can make getting a mortgage harder, but not always impossible. Some lenders may still consider your application, especially if the issue was historic, settled, or your wider financial position is strong.
Adverse credit is a term used to describe negative marks on your credit file. This can include missed payments, defaults, County Court Judgements (CCJs), Individual Voluntary Arrangements (IVAs), debt management plans, bankruptcy or other signs that you have struggled with repayments in the past.
If you are applying for a mortgage, adverse credit can make things more difficult because lenders may see you as a higher-risk borrower. However, it does not automatically mean you cannot get a mortgage. The right option will depend on the type of credit issue, how recent it was, whether the debt has been settled, your deposit, your income and the lender’s criteria.
At Key Mortgage Advice, we help clients understand their mortgage options when their credit history is not perfect. Our mortgage brokers in Garstang, Preston and Southport can review your situation and explain what may be realistic before you apply.
What Counts As Adverse Credit?
Adverse credit refers to any negative information on your credit report that could affect your ability to borrow. These records show lenders that there may have been issues with repayments, debts or financial commitments in the past.
Common examples of adverse credit include:
- Missed or late credit card payments
- Missed or late loan payments
- Defaults on credit agreements
- County Court Judgements, also known as CCJs
- Individual Voluntary Arrangements, also known as IVAs
- Debt management plans
- Bankruptcy
- Payday loan use
- Regularly exceeding an overdraft limit
Not every credit issue is viewed in the same way. A single missed payment from several years ago is usually treated differently from a recent unsatisfied CCJ or an active debt management plan. This is why the details matter.
Adverse Credit vs Bad Credit vs Low Credit
Adverse credit, bad credit and low credit are often used in similar ways, but they do not always mean exactly the same thing.
- Adverse credit usually means there are specific negative records on your credit file, such as defaults, CCJs, missed payments or insolvency arrangements.
- Bad credit is a broader phrase that can refer to a poor credit history, a low credit score, or previous problems with borrowing.
- Low credit can sometimes mean you have limited credit history rather than serious credit issues. For example, you may have never borrowed much before, so lenders have less evidence of how you manage repayments.
Mortgage lenders do not only look at a credit score. They usually review the details behind your credit file, including what happened, when it happened, how much was involved and whether the issue has since been resolved.
How Long Does Adverse Credit Stay On Your Credit File?
Many adverse credit records can stay on your credit file for around six years. This can include defaults, CCJs, IVAs and bankruptcy records. However, the impact of adverse credit can reduce over time, especially if you have kept up with payments and avoided further issues since then.
For mortgage applications, lenders will usually look at both the age and severity of the credit issue. Recent credit problems are likely to cause more concern than older issues, particularly if they remain unpaid or unexplained.
Can You Get A Mortgage With Adverse Credit?
Yes, it may be possible to get a mortgage with adverse credit. Some high street lenders may be cautious or decline an application, but other lenders may take a more flexible view depending on your circumstances.
Your chances will usually depend on:
- The type of adverse credit on your file
- How long ago the issue happened
- Whether any debts have been settled
- The size of your deposit
- Your current income and affordability
- Your recent payment history
- The lender’s individual criteria
This is where speaking to a mortgage broker can help. At Key Mortgage Advice, our team can review your credit history, explain what lenders may consider, and help you avoid making unsuitable applications that could affect your credit file further.
How Lenders Assess Adverse Credit Mortgage Applications
Different lenders assess adverse credit in different ways. Some may decline applications with recent defaults or CCJs, while others may be willing to consider the case if the issue is older, settled, or there is a strong explanation behind it.
Lenders may look at:
- Severity: A missed payment is usually viewed differently from bankruptcy or an IVA.
- Recency: A recent issue may be more damaging than one from several years ago.
- Settlement: Settled debts can sometimes be viewed more favourably than unpaid debts.
- Deposit: A larger deposit may reduce lender risk and improve your options.
- Affordability: Lenders still need to see that the mortgage is affordable now.
- Recent conduct: Keeping up with payments since the issue can help show improvement.
How Different Credit Issues Can Affect Your Mortgage Options
The table below gives a general guide to how different types of adverse credit may be viewed. This is not a guarantee, because lender criteria can change and every application is assessed individually.
| Credit issue | How lenders may view it | What may help |
|---|---|---|
| Missed payment | Often less serious if it was isolated and historic | Clean recent payment history and a clear explanation |
| Default | Can reduce lender choice, especially if recent or unpaid | Settled default, time passed and stronger deposit |
| CCJ | May be a concern depending on value, date and whether it is satisfied | Satisfied CCJ and evidence of improved financial conduct |
| Debt management plan | Can make applications more complex, especially if still active | Stable repayments, affordability and specialist advice |
| IVA | Usually treated as a serious credit issue | Discharge date, clean credit since and specialist lender criteria |
| Bankruptcy | Usually has a significant impact on lender choice | Discharged status, time passed and strong recent credit conduct |
| Payday loans | May raise concerns about affordability and money management | No recent payday loan use and stable bank account conduct |
Will Adverse Credit Mean A Bigger Deposit Or Higher Rates?
It can do. If a lender sees your application as higher risk, you may have fewer mortgage options, higher interest rates, or a larger deposit requirement than someone with a clean credit history.
This does not mean every adverse credit applicant will need the same deposit or receive the same rate. The outcome depends on your full circumstances, including the credit issue, your income, the property, your deposit and the lender’s approach.
A mortgage broker can help you understand what may be realistic before you apply, rather than guessing based on a generic credit score.
What To Do Before Applying For A Mortgage With Adverse Credit
If you have adverse credit, preparation matters. Before applying for a mortgage, it is worth taking a few practical steps.
- Check your credit reports: Review your file with agencies such as Experian, Equifax and TransUnion.
- Correct any mistakes: If something is wrong on your report, raise it with the credit reference agency before applying.
- Avoid repeated applications: Multiple credit applications in a short period can make your file look riskier.
- Keep up with current payments: Recent clean conduct can help show lenders that your situation has improved.
- Reduce debts where possible: Lower unsecured debt may improve affordability.
- Save a larger deposit if realistic: A bigger deposit may improve lender choice.
- Be honest with your broker: The more accurate the information, the better the advice.
Using our mortgage calculator can also help you start thinking about affordability and potential monthly repayments.
Why Speak To A Mortgage Broker If You Have Adverse Credit?
When you have adverse credit, applying directly to the wrong lender can waste time and may leave another search on your credit file. A mortgage broker can help you understand which lenders are more likely to consider your circumstances before you submit an application.
At Key Mortgage Advice, we can help by:
- Reviewing your credit history before you apply
- Explaining how lenders may view your circumstances
- Identifying lenders that may be better suited to your situation
- Helping you prepare the right documents
- Advising whether it may be better to apply now or wait
You can also read our reviews to see how we have helped other clients, or visit our mortgage guides for more information.
Speak To Key Mortgage Advice About Adverse Credit
Adverse credit does not always mean you cannot get a mortgage, but it does mean getting the right advice is important. Whether you are a first-time buyer, moving home, looking at remortgaging or exploring other mortgage options, our advisers can help you understand what may be possible.
We offer face-to-face and remote appointments across our three branches. If you are looking for mortgage brokers in Garstang, mortgage brokers in Preston or mortgage brokers in Southport, our teams are here to help.
Call us on 01772 620000 or email enquiries@keymortgageadvice.co.uk to speak to one of our advisers.
Adverse Credit FAQs
What does adverse credit mean?
Adverse credit means there are negative records on your credit file. This can include missed payments, defaults, CCJs, IVAs, debt management plans, bankruptcy or other issues that suggest you have struggled with borrowing in the past.
Is adverse credit the same as bad credit?
The phrases are often used together, but adverse credit usually refers to specific negative entries on your credit file. Bad credit is a broader phrase that can include adverse credit, low credit scores or limited borrowing history.
Can I get a mortgage with adverse credit?
It may be possible to get a mortgage with adverse credit, but it depends on your circumstances. Lenders will look at the type of credit issue, how recent it was, whether it has been settled, your deposit, income and affordability.
Can I get a mortgage with a CCJ?
Some lenders may consider mortgage applications from people with a CCJ, especially if it is older, satisfied and your recent credit conduct is strong. The value and date of the CCJ can make a difference.
Can I get a mortgage with defaults?
It may be possible to get a mortgage with defaults, but lender choice can be more limited. A settled default from several years ago may be viewed differently from a recent unpaid default.
How long does adverse credit stay on my credit file?
Many adverse credit records can remain on your credit file for around six years. The impact on a mortgage application can depend on the type of record, how recent it is and what your credit history looks like now.
Will adverse credit mean I need a bigger deposit?
Possibly. Some lenders may ask for a larger deposit if they view the application as higher risk. This depends on the type of adverse credit, your affordability and the lender’s criteria.
Should I apply directly to a lender if I have adverse credit?
It is usually worth speaking to a mortgage broker first. Applying to unsuitable lenders can lead to declined applications and additional credit searches. A broker can help you understand which lenders may be more suitable before you apply.
Can Key Mortgage Advice help if I have adverse credit?
Yes. Key Mortgage Advice can review your situation, explain what mortgage options may be available and help you prepare your application. You can contact us to speak to an adviser.
Sharon Duckworth
Sharon Duckworth is the company’s director having founded Key Mortgage Advice in 2001 and works extremely hard to keep the success and excellent reputation of Key Mortgage Advice growing and improving.
This article has been reviewed and approved by Sharon.
