Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Why mainstream lenders decline these cases
Many high street lenders score an application automatically against a single cut-off. That score cannot tell the difference between a default from a difficult period several years ago and someone who is missing payments today, so both may be declined — and both leave a hard search on the file.
Specialist lenders tend to underwrite manually. They ask what the issue was, how long ago it was registered, whether it has been satisfied, and whether there is security. That is why the same credit file can be declined by one lender and offered terms by another.
How different credit issues are weighted
Lenders do not treat all adverse credit the same. Broadly:
- Late payments — often given less weight if isolated and more than a year old.
- Defaults — the age of the default and whether it has been satisfied make a large difference.
- CCJs (County Court Judgments) — usually treated more seriously than defaults; a satisfied CCJ is viewed more favourably than an unsatisfied one.
- IVAs and debt management plans — considered by some lenders once completed; while active, options are very limited.
- Bankruptcy — generally only considered after discharge, and by a small number of lenders.
- Most adverse markers drop off your credit file six years after they are registered.
Secured or unsecured with bad credit?
Homeowners with adverse credit are sometimes offered secured loans when unsecured lenders decline, because the property gives the lender security. That can mean larger amounts or longer terms, but it also means your home may be repossessed if you do not keep up repayments.
Turning unsecured debts into debt secured on your home is a significant step. A longer term can also make the total cost much higher even when the monthly payment falls. Weigh both before deciding.
What to do before you apply
- Check your credit reports with Experian, Equifax and TransUnion. They do not hold identical data, and errors are common — dispute anything that is wrong or should have dropped off.
- Settle what you can. A satisfied default or CCJ is treated more favourably than an outstanding one.
- Stop applying for new credit. A cluster of recent searches can read as financial distress.
- Use eligibility checkers that do not affect your credit score before making a full application, and apply to one lender at a time.
- Register to vote at your current address, which helps lenders confirm your identity.
When borrowing more is not the answer
If you are already behind on bills or using credit to cover essentials, another loan can make things worse. Free, confidential debt advice is available from StepChange (stepchange.org) and National Debtline (nationaldebtline.org), and MoneyHelper (moneyhelper.org.uk) offers impartial guidance on borrowing and debt.
Be wary of any firm that charges an upfront fee to arrange a loan or promises approval regardless of your credit history.
Bad credit loans guides
Common questions
Can I get a loan with bad credit?
Can I get a loan with bad credit?
Often, yes — the question is which product and at what price. Specialist lenders look at the type of issue, how recent it is and whether it has been settled, rather than applying a single score cut-off. A settled default from several years ago is a different case from an unsatisfied CCJ registered last month.
Is a secured or unsecured loan better with bad credit?
Is a secured or unsecured loan better with bad credit?
Secured loans may be available to homeowners when unsecured lenders decline, because the property is security, but your home is at risk if you do not keep up repayments. Unsecured loans do not put your home at risk, though amounts tend to be smaller and rates higher with adverse credit.
Will applying hurt my credit score further?
Will applying hurt my credit score further?
Eligibility checkers that do not affect your score will not. A full application usually involves a hard search. What does lasting harm is a trail of declined applications, so check your eligibility first and apply once, to a lender likely to accept you.
How long does bad credit stay on my file?
How long does bad credit stay on my file?
Most adverse markers, including defaults and CCJs, stay on your credit file for six years from the date they were registered. Lenders tend to give more weight to recent issues than older ones.
Can I get a loan after an IVA or bankruptcy?
Can I get a loan after an IVA or bankruptcy?
Some lenders will consider applications once an IVA is completed or a bankruptcy is discharged, usually on stricter terms. While an IVA is active or a bankruptcy is undischarged, borrowing is very limited and may require permission.
Should I wait for my credit to improve?
Should I wait for my credit to improve?
Sometimes. If a marker is about to drop off your file, waiting may get you better terms. If you are borrowing to deal with existing debt problems, free advice from StepChange or National Debtline may help you find a better route than new credit.
Where can I get free debt advice?
Where can I get free debt advice?
StepChange (stepchange.org) and National Debtline (nationaldebtline.org) offer free, confidential debt advice. MoneyHelper (moneyhelper.org.uk), backed by the government, offers impartial guidance on borrowing and managing money.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Important: This page is general information, not financial advice or a personal recommendation. Product features and eligibility vary by provider — check the provider's own terms before you buy or apply. Lender attitudes to adverse credit are indicative and vary between lenders and over time.