Can You Still Get a Mortgage with Bad Credit? Here’s What Homebuyers in the U.S. and UK Need to Know
In the U.S. and UK, getting a mortgage is the most common path to homeownership. But if your credit score isn’t perfect—or worse, if you’ve had financial trouble in the past—does that mean your dream of owning a home is over? Not necessarily. Many lenders are more flexible than you think, and there are real steps you can take to move forward. This article walks you through how bad credit impacts your mortgage prospects, what options are available, and how to prepare and repair your credit before applying.
In both the American and British credit systems, your credit history is tracked by credit reference agencies—Experian, Equifax, and TransUnion in the U.S., and similar agencies in the UK. They calculate your credit score based on your financial behavior, including how reliably you repay loans, how much debt you carry, and whether you’ve defaulted or filed for bankruptcy. A high score makes borrowing easier. A low score—or “bad credit”—typically means missed payments, high debt utilization, frequent credit applications, or legal marks like County Court Judgments (CCJs) in the UK. Even if you’ve never used credit before, the lack of history may still result in a low score.
Lenders heavily rely on credit scores during the mortgage approval process. Recent late payments, high debt-to-income ratios, and multiple recent credit applications are all red flags. If you’ve had a bankruptcy or CCJ, this could hurt your chances even more. But bad credit doesn’t always mean an automatic rejection. For example, in the U.S., government-backed loans such as FHA mortgages allow borrowers with scores as low as 580—or even lower in some cases—to qualify, as long as other requirements are met. In the UK, some specialist lenders like Kensington Mortgages or Precise Mortgages are more flexible with credit history and assess your overall financial picture, not just your score.
Real-life stories show how borrowers with bad credit can still succeed. Marie, a single mother from California, lost her job during the pandemic and missed several credit card payments, dropping her FICO score to 540. After getting back on her feet and saving up a 10% down payment, she was approved for a mortgage through an FHA loan. In Manchester, UK, Tom and Olivia applied for a mortgage together. Tom had a CCJ on his record from a mobile phone bill during university. They worked with a mortgage broker who found a lender willing to approve their application, though with a slightly higher interest rate, and they were able to buy their first home.
If you’re concerned about your credit, working with a mortgage broker can make a huge difference. Brokers have access to a wide range of mortgage products and understand each lender’s requirements. They can help you avoid applying to lenders likely to reject you, which could hurt your credit score further. Some brokers offer “soft search” checks that won’t affect your score and only charge a fee if the mortgage is successfully completed.
When applying with a partner or co-borrower, both parties’ credit histories will be considered. If one of you has bad credit, it could result in a lower loan amount, higher interest rate, or even a declined application. In some cases, it may make sense for only the person with better credit to apply or to delay applying until both scores improve. Before you apply, review your credit reports for any “financial associations” to ensure your credit isn’t being dragged down by someone else’s history.
Shared ownership properties—popular in the UK—can offer a more accessible route to homeownership for people with imperfect credit. This scheme allows buyers to purchase 25%–75% of a property and pay rent on the remaining share to a housing association. Because the mortgage amount is smaller, lenders may be more flexible with applicants who have had credit challenges, though approval still depends on your overall financial situation. Once your credit improves, you may be able to buy a greater share—or even 100%—of the property over time, a process called “staircasing.”
Improving your credit score takes time and discipline, but it’s doable. First, always pay your bills on time—whether credit cards, utilities, or loan payments. Second, try to reduce your credit utilization (keep it under 30% of your limit). Third, avoid opening new credit lines or making large purchases before applying for a mortgage. Fourth, regularly check your credit reports for any errors and dispute them. Fifth, if you're renting, see if your landlord can report your rent payments to credit bureaus through platforms like Rental Kharma in the U.S. or the Experian Rental Exchange in the UK.
Beyond credit scores, lenders will look at your income, job stability, and monthly spending. Most lenders will ask for three to four months of bank statements to check your cash flow and financial behavior. To prepare for a mortgage application, reduce unnecessary expenses, avoid using overdrafts, and save for a solid down payment. It also helps to pay down short-term debts, especially credit cards and personal loans, to reduce your overall debt ratio.
In short, bad credit doesn’t mean homeownership is off the table. In both the U.S. and UK, there are multiple paths to securing a mortgage even with a troubled credit history. What matters most is taking action: start repairing your credit, build a responsible financial track record, and seek professional advice when needed. With patience and planning, your goal of owning a home is absolutely within reach—even if your credit isn’t perfect.