A bad credit history isn't the end of the story.

Nobody is as unusual as they think

Every week someone starts a call with "you'll probably laugh at this".

Nobody laughs. A missed payment during a divorce, a default from a flat share where the bill was in your name, a CCJ you only found out about when you checked your file. These are ordinary, and they are far more common than the people who have them imagine.

Adverse credit does not automatically stop you getting a mortgage. It changes which lenders will consider you, how much deposit they want, and what the terms look like. Those are real consequences. They are not the same as a no.

What tends to do actual damage is guessing: applying to a few lenders to "see what happens", collecting declines and searches, and arriving at the one lender who might have helped with a file that now looks worse than when you started.

What lenders are actually looking at

Three things, roughly in this order:

How serious was it? A late phone bill sits at one end. Bankruptcy or repossession at the other. Defaults, CCJs, payday loans and debt management plans sit in between, and lenders treat them differently.

How long ago? This matters more than almost anything. Recent issues weigh heavily. Older ones fade, and many lenders care far less about something from four years ago than something from last autumn.

What has happened since? A clean two years after a bad patch tells a story that the bad patch alone does not. Lenders are looking for a pattern, and recovery is a pattern.

Then, practically: has it been satisfied or settled, how big was it, and is there a pattern of repeat problems rather than one bad stretch?

The main types, and roughly how they land

Late or missed payments. The most common, and often the least damaging, particularly on non-essential accounts and if not recent.

Defaults. The account was closed as unpaid. Age and size matter, and a satisfied default is generally viewed better than an outstanding one.

County Court Judgments. A court decision that you owed money. Age, amount and whether it is satisfied all count. Plenty of people find one on their file that they never knew about, usually attached to an old address.

Debt management plans and IVAs. These narrow the field considerably while active, and the picture changes once they are completed.

Bankruptcy or repossession. The most serious, and the one where time matters most. Lenders generally want substantial distance from the event.

Payday loans. Not an adverse marker in themselves, but a number of lenders view recent use as a sign of financial strain even when every loan was repaid on time.

I am describing general patterns, not rules. Every lender sets its own criteria and they change regularly, which is why "my mate got turned down with a default" tells you nothing about your own case.

Do this before you apply anywhere

Check all three credit files. Experian, Equifax and TransUnion hold different information, and the one you have never looked at is the one with the surprise on it. You are entitled to see your own data.

Look for errors. Accounts that are not yours, settled debts showing as outstanding, old addresses linked to someone else's file. Mistakes happen, and they can be challenged with the agency and the lender concerned.

Get on the electoral roll. Quick, free, and it solves a surprising number of problems.

Gather the explanations. If there was a redundancy, an illness, a separation or a business that failed, a short factual explanation helps. Lenders who consider adverse credit are used to reading them.

Leave new credit alone. New borrowing in the months before an application rarely helps.

Try the Mortgage Ready questionnaire. It takes about three minutes, there is no credit check, and it gives you a score and the two things worth tackling first.

What I need from you, and why honesty saves time

Tell me everything, including the bits you would rather not.

I am not there to judge your 2022. I am there to find lenders whose criteria fit your actual history, and I cannot do that from a sanitised version. Something you leave out will surface at underwriting, and a decline at that stage costs you weeks and leaves a search on your file.

The conversation takes twenty minutes and nothing in it shocks me.

What it realistically means for your options

Being straight with you: adverse credit usually means a larger deposit, a narrower choice of lender and terms that are not the same as someone with a clean file. Anyone telling you otherwise is selling something.

What it also means, for many people, is that a mortgage is possible now rather than in five years, and that a few months of preparation can move you into a better position. Sometimes my honest advice is to wait six months, let something drop off and tidy the file first. That advice is free, and it is sometimes worth more than an application.

Self-employed and a credit blip?

A combination I see often, and it is workable. It narrows the field twice over, so the order you approach lenders in matters more than usual. The self-employed mortgages page covers how income is assessed, and the two issues are best looked at together rather than one at a time.