Buying a Home with Bad Credit: What No One Tells You
So, you want to buy a house, but your credit score isn’t great. Maybe you missed a few credit card payments, had some debt pile up, or even dealt with bankruptcy in the past. Whatever the reason, you’re probably worried that no lender will take a chance on you.
Here’s the truth: bad credit makes things harder, but it doesn’t make homeownership impossible. There are still ways to get approved for a mortgage—you just need to know where to look and how to prepare. Most people assume they’re stuck renting forever if their credit score isn’t perfect, but that’s far from the case. Let’s break down what you need to know and how you can still get a mortgage, even with a rough credit history.
How Bad Credit Affects Mortgage Approval
Lenders check your credit score to see how risky it is to lend you money. A high score means you’ve managed your debt well, while a low one suggests you’ve had trouble keeping up with payments. This score helps lenders decide two things:
- Whether they’ll approve your mortgage at all. Some lenders have strict credit requirements, while others are more flexible.
- What kind of interest rate you’ll get. A lower score usually means higher interest rates, making your mortgage more expensive in the long run.
But here’s what many people don’t realize: banks aren’t your only option. If you have bad credit, traditional lenders might turn you down, but there are other mortgage providers who specialize in working with people in your situation.
Instead of giving up, you can turn to brokers experienced in adverse credit mortgages for assistance. These brokers know which lenders are willing to work with people who have past credit issues, giving you a much better shot at getting approved.
What Counts as “Bad Credit” for a Mortgage?
Different lenders have different definitions of “bad credit,” but in general, these things can make it harder to get approved:
- Missed or late payments on credit cards, loans, or utility bills
- Defaults (where you didn’t pay back a loan and it was sent to collections)
- County Court Judgments (CCJs) from unpaid debts
- Bankruptcy or IVAs (formal agreements to pay off debt over time)
- Too much existing debt, making it hard for lenders to trust you can handle more
That said, having one of these on your record doesn’t mean you can’t get a mortgage. Some lenders are more understanding than others, and the older your credit issues are, the less they tend to matter.
Steps to Improve Your Chances of Getting Approved
Even with bad credit, you can take steps to make yourself look like a safer bet to lenders. Here’s how:
1. Save for a Bigger Deposit
If you can put down a larger deposit—say 15-20% instead of the usual 5-10%—lenders may be more willing to approve your mortgage. A bigger deposit lowers the risk for them, which can also help you get a better interest rate.
2. Check Your Credit Report for Mistakes
Surprisingly, credit reports aren’t always accurate. Errors—like debts that you’ve already paid off or incorrect missed payments—can drag down your score. Checking your report and fixing mistakes can sometimes give your score an instant boost.
3. Pay Down Debt Where You Can
Lenders look at your debt-to-income ratio—basically, how much of your income already goes toward repaying other debts. If you can lower your existing debt before applying, it shows lenders you have more breathing room for mortgage payments.
4. Show Proof of a Steady Income
If your credit isn’t great, proving you have stable, reliable income can work in your favor. Having a steady job (or consistent self-employment income) reassures lenders that you’ll be able to keep up with mortgage payments.
5. Consider a Guarantor or Joint Mortgage
If you have a family member with good credit who’s willing to co-sign, lenders might be more willing to approve your application. Just remember, if you can’t make payments, your guarantor is on the hook—so it’s a big responsibility.
The Role of Specialist Lenders
Most people only think of high-street banks when it comes to mortgages, but specialist lenders exist specifically for people with credit challenges. These lenders consider more than just your credit score—they look at your overall financial situation. If you can prove you can afford the mortgage, they might be willing to approve you even if traditional banks say no.
The downside? These lenders often charge higher interest rates since they’re taking on more risk. But once you’ve built up a better credit history, you might be able to refinance to a cheaper mortgage later.
Will a Bad Credit Mortgage Hurt You in the Long Run?
A lot of people worry that taking out a mortgage with bad credit will keep them stuck with high-interest payments forever. But that’s not necessarily true.
If you keep up with your mortgage payments, your credit score will gradually improve. After a few years, you might qualify for a better deal. Some lenders even offer “credit repair mortgages” that let you switch to a lower rate after proving you can make payments on time.
The key is to not take on more debt than you can handle. If you stretch yourself too thin, missing payments could make things worse. But if you manage things well, a bad credit mortgage can actually help you rebuild your financial standing.
Final Thoughts
Having bad credit doesn’t mean you’ll never own a home—it just means you might have to take a different route to get there. By saving a bigger deposit, working with the right lenders, and making smart financial moves, you can still get approved.
The most important thing? Don’t rush into a deal without understanding the full cost. A mortgage is a long-term commitment, and getting one with bad credit usually means higher interest rates. But if homeownership is your goal, taking the right steps now can put you on the path to eventually securing a better deal.
So, don’t lose hope. With the right approach, buying a home with bad credit is absolutely possible.
