Bad credit is a term that refers to impairment to a credit file. There are many different types of bad credit – such as County Court Judgements and loan arrears – each of which can affect a credit file in different ways. Mortgage lenders recognise this and have several different categories of bad credit such as light, medium, and heavy adverse.

In the past bad credit restricted people from obtaining any form of credit such as a mortgage, loan, or credit card. These days there are millions of people in the UK who have impairments to their credit file which accounts for a large portion of the population. This means that there is a large market for finance products that cater to individuals who suffer from bad credit.

Mortgage lenders recognise this and now offer home loans to all types of credit impaired borrowers. The specific mortgage and remortgage products that a borrower is able to apply for depends on the level of impairment they have to their credit file. These levels are broadly classified as light, medium, and heavy adverse.

Although there are no precise definitions of these terms lenders generally categorise mortgage applicants as “light adverse” if their credit file is unimpaired except for several missed payments on a mortgage or loan. Conversely, an individual will normally be regarded as “heavy adverse” if they have been made bankrupt or are under an Individual Voluntary Agreement (IVA). Lenders usually classify people as “medium adverse” if they fall somewhere between light and heavy.

There are many lenders in the UK who offer mortgage products for each of the above categories. Therefore, if you suffer from bad credit, you should not assume that you are unable to obtain finance for your home. If you suffer from bad credit and wish to buy a home or remortgage a property you already own Contact Us today through our online form to receive expert advice from an independent mortgage advisor.