What is adverse credit and how does it impact your finances?

What is adverse credit?

Adverse credit simply means you have negative information recorded on your credit file, such as missed or late payments, defaults, County Court Judgments (CCJs), or bankruptcy. This tells lenders you’ve had difficulty managing debt in the past, which makes you a higher-risk borrower in their eyes when it comes to mortgage loans.

There is no set score that puts you into the adverse credit category. In fact, the scoring systems change depending on the credit agency. But if you have a poor or very poor score, lenders may put you in that category. 

The good news is that adverse credit isn’t permanent. Many people repair their credit history over time and go on to get a mortgage, even after serious financial difficulties.

Read more: What is a credit score and how can you improve yours?

What causes adverse credit?

Adverse credit can develop for many reasons. The most common causes include:

• Missing or making late credit card or loan payments
• Defaulting on a loan or utility bill
• Having a CCJ or Individual Voluntary Arrangement (IVA)
• Declaring bankruptcy
• Entering a debt management plan (DMP)

How long does adverse credit last?

Adverse credit will be visible on your credit file for 6 years. So, if you miss a credit card payment, for example, it will usually take 6 years for this to be deleted from your credit report. 

For example:

• A missed credit card payment from June 2020 will usually disappear by June 2026.
• A default or CCJ will also remain for six years, even if it’s paid off sooner.

Whether you’ve missed a couple of payments here and there or you’ve defaulted on several different debts, don’t panic. It’s possible to improve your credit score over time and even get a mortgage — especially if you use an expert mortgage broker like Tembo.
Perfect for you:Why use a mortgage broker

How do I know if I have adverse credit?

To find out if you have adverse credit, you need to check your credit history online. There are three main credit referencing agencies in the UK used and trusted by mortgage lenders:

• Experian
• Equifax
• TransUnion

Each agency has its own scoring system, so your score might differ slightly between them.

By looking at your credit report yourself, you can see exactly what information the credit referencing agencies have on you. They’ll usually have a track record of your previous addresses, bank accounts, past payments and any credit searches. Missed or late payments will also show up on your report - these can affect your credit score. 

Identifying these issues will give you an indication of what you need to address to improve your credit score. If you notice any mistakes, let the credit agency know. Correcting these mistakes could improve your credit score, which will help you get more favourable mortgage deals. 
Read more:Are you a financial ick? This money hygiene checklist may expose you

What’s the impact of adverse credit?

Having adverse credit doesn’t automatically mean you can’t get a loan like a mortgage, but it can affect:

• Which lenders are willing to work with you
• How much you can borrow
• Your interest rate
• The deposit size you’ll need
  Mainstream banks are often stricter, while specialist lenders focus on helping people with poor credit, self-employment, or complex finances. So even if one bank says no, another might say yes. Working with an expert mortgage broker can help you find the best lender for your situation, increasing your chance of approval.

Can I get a mortgage with adverse credit?

Yes, it’s absolutely possible to get a mortgage and buy a home even if you’ve struggled with debt before.

You may just need to meet slightly different conditions, such as:

• Providing a larger deposit (often 10–20%)
• Paying a slightly higher interest rate
• Showing a strong record of recent payments

There are even specific products designed for this situation — often called adverse credit mortgages or poor credit mortgages.

A mortgage broker (like Tembo) can help you find lenders that accept applicants with missed payments or defaults, and are most likely to approve you.
Learn more: What can I do if my mortgage application is declined?

Can I remortgage with bad credit?

Yes, but it depends on your current circumstances. If you’ve built up equity in your property and it’s been a few years since you missed repayments, you may still be able to remortgage. 

You may have to pay a higher interest rate than you would if you didn’t have adverse credit, so it’s a good idea to work with a mortgage broker instead of applying for a mortgage directly with a lender. 

A broker will compare hundreds (or in our case thousands) of mortgages from across the market, before recommending the lenders most likely to approve your application with terms that work for you.

How to get a mortgage with bad credit

Getting approved with adverse credit is about proving you’re financially stable. Here’s how to boost your chances:

1. Work with a specialist broker. They’ll know which lenders are open to bad credit applicants.
2. Gather your documents. Pay slips, bank statements, and proof of address help show consistency.
3. Explain your credit history. Lenders appreciate honesty and context.
4. Keep your accounts up to date. Continue paying everything on time while you apply.
5. Avoid new credit applications. Too many hard checks can hurt your score.

If you’ve only had “light” adverse credit (like a few missed payments or small defaults), we may be able to find lenders who will consider your application.

If you’ve had more serious issues, like bankruptcy or repossession, a specialist adverse credit mortgage broker may be the best option.

You might also like: Agreement in Principle: What can go wrong?

How to get adverse credit removed

You can’t usually remove accurate negative information before the six-year mark, but you can lessen its impact or remove errors.

Here’s how:

1. Check all three credit reports. Look for outdated or incorrect entries.
2. Dispute mistakes. Contact the credit agency with evidence (e.g. receipts or letters).
3. Ask lenders for a ‘notice of correction’. You can add a short statement explaining what happened, e.g. job loss or illness.
4. Keep paying on time. Positive behaviour gradually outweighs old negatives.
5. Register to vote. It helps lenders verify your identity and boosts your score slightly.

If your adverse credit was due to an admin error or fraud, agencies can remove it immediately once verified.