The short version
- Lenders look at the type of problem, how big it was, how recent, and whether it’s been settled.
- Most entries, such as defaults, stay on your credit file for six years.
- Check your file with all three agencies before anything else. Mistakes are common.
- Several applications in a short time can make things harder. Talk first.
What lenders actually look at
There’s no single “bad credit” score that rules you in or out. Lenders ask four questions: what it was, how much it was for, when it happened, and whether it’s been settled. A single late phone bill from four years ago is a very different case from recent missed mortgage payments.
The common problems, in plain English
- Missed or late payments: recorded month by month. Recent ones on a mortgage or rent matter most.
- Defaults: when a lender closes an account after a run of missed payments. They stay on your file for six years from the default date.
- Debt management plans (DMPs): some lenders will consider you during a plan, more once it’s finished.
- IVAs and past bankruptcy: usually need time since completion or discharge, and the choice of lender is narrower.
- Payday loans: even ones repaid on time can put some lenders off, especially if they’re recent.
What you can do now
- Get your credit reports from Experian, Equifax and TransUnion. Each one can hold different information.
- Make sure you’re on the electoral roll at your current address.
- Ask for anything wrong to be corrected, and add a short notice of correction if something had a genuine reason behind it.
- Keep current accounts and credit cards up to date from here on. Recent good months help.
- Hold off on new credit applications until you’ve talked your case through.
All lending is subject to status and lender criteria, and there is no guarantee of approval. Your home may be repossessed if you do not keep up repayments on your mortgage.