Adverse CreditMortgages Guide

Different types of adverse credit carry different weights with lenders. Generally, the hierarchy runs from missed payments (least severe) through defaults, CCJs, debt management plans, IVAs, to bankruptcy (most severe). However, recency and amount matter enormously—a £200 CCJ from five years ago has far less impact than a £5,000 default from last year.

Specialist lenders assess adverse credit differently from high street banks. While mainstream lenders typically reject any recent adverse credit, specialists have tiered criteria that consider the full picture. They weigh the type of issue, when it occurred, whether it's satisfied, the amounts involved, and crucially—what's happened since. Clean credit behaviour since the issue demonstrates rehabilitation.

Deposit requirements typically increase with adverse credit severity. Where someone with clean credit might access 95% LTV mortgages, those with recent CCJs might need 25-35% deposits. However, this isn't fixed—lenders consider the complete application including income stability, employment type, and the property. A strong application in other areas can partially offset credit issues.

Interest rates reflect the additional risk lenders take with adverse credit applications. Expect rates 1-4% higher than equivalent clean-credit products. However, these shouldn't be permanent—many clients remortgage to better rates after 2-3 years of clean payment history, once the adverse credit has aged and their track record strengthens.