Introduction.
A difficult period with money does not have to stop you buying a home or remortgaging.
Missed payments, defaults and county court judgments are more common than most people think. They often follow a job loss, illness, a separation or simply a bill that was missed during a move. Lenders know this.
What matters is what happened, how long ago, how much it was for and whether it has been settled. Some lenders will consider applicants with recent problems; others want a clean record for several years. The right lender can mean the difference between a decline and an offer at a competitive rate.
This guide explains the main types of adverse credit, how long they stay on your file, how lenders assess them, and the steps that strengthen your credit before you apply. If you have no credit history at all, the building steps in chapter six apply to you too.
How long most adverse credit stays on your file, whether or not it has been repaid.
01Types of adverse credit.
“Adverse credit” covers a wide range of events, from a single late phone bill to bankruptcy. Lenders treat each very differently.
From least to most serious
| Event | What it means |
|---|---|
| Late or missed payments | A payment made late or not at all, recorded month by month |
| Arrangement to pay | An agreement with a lender to pay less for a time |
| Default | The lender has closed the account after several missed payments |
| CCJ | A county court judgment ordering you to repay a debt |
| Debt management plan | An informal plan to repay creditors through a provider |
| IVA | A formal, legally binding agreement with creditors |
| Bankruptcy or repossession | The most serious events, with the longest impact |
Scotland has its own equivalents, including decrees and trust deeds.
Other things lenders notice
- Payday loans. Many lenders decline recent use, even if repaid on time.
- High card balances. Using most of your limit suggests money is tight.
- Many recent searches. Several applications in a short time can look like a need for credit.
- Financial links. A joint account ties your file to the other person’s.
Adviser’s note
Tell us everything at the start, however small. Lenders see your full file, and a surprise during underwriting is far harder to fix than a known issue.
02How long it stays on your file.
Most entries stay on your credit file for six years. Paying off a debt does not remove it, but it does change how lenders see it.
Typical time on file
| Entry | Stays for | Clock starts |
|---|---|---|
| Late payments | 6 years | Each payment date |
| Default | 6 years | Date of default |
| CCJ | 6 years | Date of judgment |
| IVA | 6 years | Start date, or longer if it runs on |
| Bankruptcy | 6 years | Date of bankruptcy |
| Searches | 1 to 2 years | Date of search |
England and Wales. A CCJ paid in full within one month of judgment can be removed from the register. Bankruptcy is usually discharged after a year, but stays on file for six.
What changes over time
- Recency. Lenders care most about the last 12 to 36 months.
- Satisfied or not. A settled default or CCJ is viewed far better than an open one.
- Size. Small defaults, such as a phone bill, are often treated more leniently.
- The pattern since. A clean record after the event shows the problem is behind you.
03How lenders assess it.
Lenders sort applicants into broad bands. Your band decides which lenders will consider you, the deposit you need and the rate you pay.
An indicative picture
| Credit history | Lenders | Typical deposit |
|---|---|---|
| Clean, or minor and old | High street | From 5% |
| Settled defaults or CCJs, over 2 to 3 years old | Many high street and building societies | From 10% |
| Recent or unsettled issues | Specialist lenders | From 10% to 15% |
| IVA, bankruptcy or repossession | Specialist lenders, usually after discharge | From 15% to 25% |
Indicative only, October 2026. Each lender sets its own limits on the number, value and age of adverse entries.
What underwriters ask
- When did it happen, and has it been repaid?
- How much was it for, and how many entries are there?
- Was it a one-off with a clear reason?
- Is your income stable now, and are your other accounts up to date?
- Is it on a mortgage or secured loan? This is treated most seriously.
Adviser’s note
A higher rate is often temporary. Many clients take a shorter fix with a specialist lender, then remortgage to a mainstream rate once their file has improved.
04Checking your credit reports.
There are three main credit reference agencies in the UK. Lenders may use one, two or all three, and the information held can differ between them.
The three agencies
| Agency | How to see your report |
|---|---|
| Experian | Free statutory report, or through its own and partner services |
| Equifax | Free statutory report, or through partner services |
| TransUnion | Free statutory report, or through partner services |
You have a legal right to see the data each agency holds about you, free of charge.
What to look for
- Accounts you do not recognise
- Payments shown as late that were made on time
- Settled debts still shown as outstanding
- Old addresses and links to people you no longer share finances with
- Whether you are on the electoral roll at your current address
Scores are a guide
Each agency shows its own score, but lenders do not see it. They use the data in your report and apply their own scoring.
05Correcting and explaining your file.
You cannot remove accurate information, but you can correct mistakes and add context that underwriters will read.
Dispute errors
Raise a dispute with the agency. It will check with the lender and correct the record if it is wrong.
Settle what you can
Repay defaults and CCJs and ask for them to be marked as satisfied on every report.
Remove old links
Ask for a notice of disassociation from anyone you no longer share finances with.
Add a note
A notice of correction of up to 200 words lets you explain an entry, such as illness or a job loss.
Beware credit repair promises
No company can legally remove accurate adverse credit from your file. Everything above you can do yourself, free of charge.
06Building credit, step by step.
Lenders want to see recent, steady evidence that you manage credit well. Six to twelve months of good habits can make a noticeable difference.
The foundations
- Register to vote. Being on the electoral roll at your address is one of the simplest and most important steps.
- Pay everything on time. Set up direct debits for at least the minimum on every account.
- Keep balances low. Aim to use well under half of your card limits, and clear them in full where you can.
- Keep old accounts open. A long, well-run account helps more than a new one.
If your file is thin or damaged
- A credit-builder card. Use it for a small regular bill and clear it in full each month.
- Rent and bills. Some services can add rent payments to your report.
- Space out applications. Use soft-search eligibility checks and avoid several hard searches before a mortgage.
- Avoid payday loans. Even repaid on time, they put many lenders off.
- Watch buy now, pay later. These plans can appear on your file, and lenders ask about them.
Of clean, steady credit use before applying makes a real difference.
07Specialist lenders and your options.
Specialist lenders underwrite each case by hand. They look at the story behind the credit file, not just a score.
What specialist lenders may accept
| Situation | Often considered |
|---|---|
| Missed payments | Including in the last 12 months |
| Defaults and CCJs | Settled or unsettled, within value limits |
| Debt management plan | Often with a track record of payments |
| IVA | Usually once completed, sometimes during |
| Bankruptcy | Usually from one to three years after discharge |
Indicative only. Criteria, rates and deposit requirements vary between lenders and change regularly.
Ways to improve your options
- A larger deposit. Each step down in loan to value opens up more lenders and better rates.
- A joint application. A partner with a clean file can help, though both files are checked.
- Family support. A gifted deposit or a joint borrower sole proprietor mortgage.
- Timing. Waiting until an entry passes a lender’s cut-off, such as two or three years, can transform the choice.
Adviser’s note
Every declined application adds a search to your file. We check criteria first and only apply where the case fits.
08A purchase after adverse credit.
A couple rebuilding after a difficult year
Sam and Priya had two defaults and a £1,800 CCJ from three years earlier, after Sam was made redundant. Both were now in steady jobs, and their bank had declined them.
- Purchase
- £375,000 house, first home
- First steps
- Settled the CCJ and defaults, joined the electoral roll, removed an old link to a former flatmate
- Waiting
- Ten months of clean credit use before applying
- Mortgage
- £318,750 at 85% loan to value with a specialist lender, two-year fix
- Plan
- Remortgage to a mainstream lender at the end of the fix
This example is illustrative and does not describe a real client.
09Checklist and glossary.
Before you apply
- Download your reports from all three agencies
- Dispute any errors and mark settled debts as satisfied
- Register to vote at your current address
- Set direct debits on every account
- Bring card balances well below their limits
- Avoid new credit applications for at least six months
- Gather letters showing debts are settled
- Write a short note explaining what happened and what changed
Glossary
- Adverse credit
- Any negative entry on your credit file.
- Default
- An account closed by the lender after missed payments.
- CCJ
- County court judgment: a court order to repay a debt.
- Satisfied
- A debt or judgment that has been repaid in full.
- IVA
- Individual voluntary arrangement with creditors.
- DMP
- Debt management plan: an informal repayment plan.
- Hard search
- A credit check other lenders can see.
- Soft search
- A check only you can see; it does not affect your file.
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