Adverse Credit Mortgage Glossary

Adverse credit is an umbrella term that describes any negative information recorded on a credit file, including missed payments, defaults, county court judgments, debt management plans, IVAs, bankruptcy and repossession. Lenders and brokers also call it bad credit, impaired credit or sub-prime credit.

For a mortgage application, the type, age, size and recency of each adverse entry matters more than the label itself. Most adverse entries stay on a credit file for six years, and many specialist lenders set criteria around how long ago the event was registered and whether it has since been settled.

An agreement in principle is a conditional statement from a lender that indicates how much it might be willing to lend, based on basic income details and an initial credit check. It is also called a decision in principle, mortgage in principle or AIP, and it is not a binding offer.

Most lenders use a soft search for an agreement in principle, which does not affect a credit score, though a minority still run a hard search. For applicants with adverse credit, an AIP from a specialist lender is a useful early signal, but the full application can still be declined once documents are reviewed.

An annulment is a court order that cancels a bankruptcy as if the bankruptcy order had never been made. A court can annul a bankruptcy where the debts and fees have been paid in full, where the order should not have been made, or where the debts are settled through an IVA instead.

An annulment is treated more favourably than a discharge because the bankruptcy is legally erased, but credit reference agencies do not always update their records automatically. Applicants usually need to send the annulment certificate to each agency, and some mortgage lenders still ask whether an applicant has ever been subject to a bankruptcy order.

An AP marker is a credit-file flag that a lender records when you agree a reduced or rescheduled payment arrangement on a credit account instead of paying the full contractual amount. It shows future lenders that the account was not conducted as originally agreed, even though no default was registered.

AP markers are often treated as seriously as late payments by mortgage underwriters, and a string of them can be viewed almost as harshly as a default. They remain visible while the arrangement runs and for six years after the account is settled or closed.

Arrears are overdue payments that have built up on a credit agreement, mortgage or household bill because the contractual amount was not paid on time. Credit files typically show arrears as a status number for each month, indicating how many payments behind the account is.

Mortgage lenders pay particular attention to arrears on previous or current mortgages and rent, because they are the strongest indicator of how a new mortgage might be conducted. Many lenders set rules such as no mortgage arrears in the last 12 to 36 months. Arrears markers stay on a credit file for six years.

An attachment of earnings order is a court order that instructs an employer to deduct money directly from a debtor's wages to repay a judgment debt, such as an unpaid county court judgment. The court sets the deduction after assessing the debtor's income and essential outgoings.

For a mortgage application, the order itself signals an unresolved court debt, and the ongoing deduction reduces the net income a lender can use in its affordability calculation. The underlying CCJ remains on the credit file for six years from the date of judgment, whether or not an attachment of earnings order is in place.

Automated credit scoring is an underwriting method that uses a computer model to score a mortgage application against the lender's lending rules and credit-file data, producing an accept, refer or decline decision without a person reviewing the case first. Most high street lenders rely on it for speed and consistency.

Automated scoring tends to penalise adverse credit bluntly, because the model cannot weigh the story behind a default or CCJ. This is why applications with adverse history are often better suited to lenders that use manual underwriting, where a human underwriter assesses the circumstances.

A bankruptcy order is a formal insolvency order, made by a court or by an adjudicator on the debtor's own application, that places a person's assets under the control of a trustee so that debts can be written off. It applies in England, Wales and Northern Ireland; the Scottish equivalent is sequestration.

A bankruptcy stays on a credit file for six years from the date of the order, and most discharged bankrupts can apply for a mortgage with specialist lenders after a waiting period, typically three or more years from discharge. Many lenders ask whether an applicant has ever been bankrupt, regardless of age.

Breathing space is a statutory protection under the Debt Respite Scheme in England and Wales that pauses most creditor enforcement, contact and interest on qualifying debts for up to 60 days while a person seeks debt advice. A separate mental health crisis version lasts for the duration of treatment plus 30 days.

Breathing space itself is not recorded on a credit file, but the missed payments or arrangements that usually accompany it are. Mortgage lenders reviewing bank statements may also see debt-advice activity, so recent use can prompt questions about affordability even though the scheme leaves no direct marker.

A CCJ is a court order, issued by the county court in England, Wales and Northern Ireland, that confirms a person owes a debt after a creditor has taken legal action and the debt was not successfully defended. It is recorded on the Register of Judgments, Orders and Fines and on credit files.

A CCJ stays on a credit file for six years from the date of judgment. If it is paid in full within one calendar month it is removed from the register entirely; paid later, it is marked satisfied but remains visible. Mortgage lenders typically set criteria around the number, value, age and satisfaction status of CCJs.

A charging order is a court order that secures an unpaid judgment debt, such as a CCJ, against a debtor's property, converting an unsecured debt into one attached to the home. The creditor can then apply for an order for sale, although forced sales are relatively rare in practice.

For mortgage purposes a charging order acts like a second charge on the property. It must usually be repaid or released before a remortgage or sale completes, and the underlying judgment remains on the credit file for six years. Lenders treat an outstanding charging order as a significant adverse event.

A CIFAS marker is a fraud-prevention record held on the National Fraud Database operated by Cifas, a not-for-profit fraud prevention service used by most UK banks and lenders. Categories differ sharply: protective registration is requested by a person whose identity is at risk, victim of impersonation records identity theft, and misuse of facility records suspected first-party fraud such as allowing an account to be used for money laundering.

Protective and victim markers should not stop a mortgage, though they slow identity checks. A misuse of facility marker, which lasts up to six years, causes many lenders to decline automatically, so specialist advice on the marker itself is often the first step.

A company voluntary arrangement is a formal insolvency procedure that lets a limited company repay an agreed proportion of its debts to creditors over time, supervised by an insolvency practitioner, while continuing to trade. It is the corporate counterpart of an individual voluntary arrangement.

A CVA does not appear on a director's personal credit file, but it matters for mortgage applications from self-employed directors because lenders assess the health of the business that generates their income. Underwriters may ask about a current or recent CVA, request accounts, and apply caution to income from a company in or recently out of an arrangement.

A credit file is a record, compiled by a credit reference agency, of how a person has managed credit and certain public records, including account payment histories, defaults, court judgments, insolvencies, electoral roll entries, financial associations and recent searches. Each of the three UK agencies holds its own version, and they often differ.

Mortgage lenders read the underlying file data rather than the headline score the agencies sell to consumers. Most negative entries drop off six years after they are registered or the account closes, which is why checking all three files before applying is a standard preparation step.

A credit reference agency is a company that collects and supplies credit information about consumers to lenders, holding payment histories, public records and search footprints. The three UK agencies are Experian, Equifax and TransUnion, and each is authorised and regulated by the Financial Conduct Authority.

Lenders do not all use the same agency, and the agencies do not hold identical data, so an adverse entry can appear on one file and not another. Each agency also calculates its own consumer score on a different scale, which is why a mortgage lender's internal assessment can differ from any score a consumer sees.

A credit repair company is a commercial firm that charges a fee to challenge or attempt to remove entries on a person's credit file. Genuinely inaccurate entries can be disputed with the lender or credit reference agency directly, free of charge, and accurate adverse data cannot lawfully be removed early by anyone.

Mortgage applicants should be cautious of firms promising to delete defaults or CCJs, because lenders keep their own records and a file that conflicts with a lender's data can raise fraud concerns. The free routes, disputes, notices of correction and complaints to the Financial Ombudsman, achieve everything a paid firm legitimately can.

Credit utilisation is the proportion of available revolving credit that a person is currently using, calculated by dividing card and overdraft balances by their combined limits. Using 3,000 pounds of a 10,000 pound limit is 30 percent utilisation.

Utilisation is a live behavioural signal rather than a historic marker, so it can be improved within one or two statement cycles. Mortgage underwriters and scoring models generally read utilisation below roughly 30 percent as comfortable, while consistently maxed-out limits suggest reliance on credit and can also reduce the amount a lender will offer once monthly repayments are counted in affordability.

The Debt Arrangement Scheme is a statutory debt repayment scheme that applies only in Scotland, allowing a person to repay their debts in full through a single regulated debt payment programme while interest and charges are frozen and creditors cannot take enforcement action. It is run under Scottish Government legislation and overseen by the Accountant in Bankruptcy.

Unlike sequestration or a trust deed, a DAS is not a form of insolvency, but the programme is recorded on the DAS Register and the underlying accounts usually carry arrears or arrangement markers for six years. Mortgage lenders treat an active programme much like a debt management plan.

A debt management plan is an informal agreement, usually arranged through a debt charity or commercial provider, under which a person makes one affordable monthly payment that is distributed to their unsecured creditors. It is not legally binding, so creditors can still add interest or take court action, although many freeze charges voluntarily.

A DMP has no entry of its own on a credit file, but the reduced payments cause arrangement markers, arrears or defaults on the included accounts, each lasting six years. Some specialist mortgage lenders accept applicants with an active, well-conducted DMP; others require it to be finished first.

A debt relief order is a formal insolvency solution in England, Wales and Northern Ireland for people with low income, minimal assets and debts within the qualifying limit, currently 50,000 pounds in England and Wales. Debts are frozen for a 12 month moratorium and then written off, and since 2024 there is no application fee in England and Wales.

A DRO is recorded on the Individual Insolvency Register and stays on a credit file for six years from approval. Homeowners cannot normally qualify, so DRO applicants are typically future first-time buyers, and most lenders apply bankruptcy-style waiting periods after the order ends.

A decree is a Scottish court judgment that confirms a debt is owed, granted by the sheriff court after a creditor raises an action and the case is not successfully defended. It is the Scottish equivalent of a county court judgment and is recorded with Registry Trust, which supplies the data to credit reference agencies.

A decree stays on a credit file for six years from the date it is granted, and mortgage lenders apply the same criteria to decrees as they do to CCJs, looking at the number, value, age and whether the debt has since been paid.

A default is a credit-file entry that a lender registers when it decides a credit agreement has broken down, normally after three to six consecutive missed payments, and closes the account to treat the full balance as due. It is one of the most common forms of adverse credit on mortgage applications.

A default remains on a credit file for six years from the default date, whether or not it is later paid, after which it disappears even if unpaid. Mortgage lenders typically set criteria around how long ago defaults were registered, their combined value, whether they are satisfied, and whether they relate to mail-order or telecoms accounts, which many treat leniently.

A default notice is a formal warning letter, required by the Consumer Credit Act 1974, that a lender must send before registering a default or taking enforcement action on a regulated credit agreement. It sets out the missed payments and gives at least 14 days to bring the account up to date.

The notice itself does not appear on a credit file; it is the registered default that follows if the arrears are not cleared that causes the six-year mark. For mortgage purposes, acting on a default notice quickly can keep an account at the level of late payments, which lenders read far more gently than a full default.

Disassociation is the process of asking a credit reference agency to remove a financial association between you and another person, such as an ex-partner, so that their credit history no longer appears alongside yours when lenders search your file. Each of the three agencies must be asked separately.

An agency will normally only disassociate once all joint accounts, joint mortgages and joint applications between the two people have been closed or transferred. For mortgage applicants, removing a link to someone with adverse credit can make a material difference, because lenders can view an associate's file when assessing an application.

Discharge is the point at which a bankrupt person is released from the debts included in their bankruptcy and from most of its restrictions, usually 12 months after the bankruptcy order is made. Discharge can be suspended if the person does not cooperate with the official receiver.

Discharge does not remove the bankruptcy from a credit file; the entry stays for six years from the order date. Mortgage lenders count waiting periods from the discharge date, with specialist lenders typically considering applications three or more years after discharge and mainstream lenders often requiring six or more, alongside a clean record since.

The electoral roll is the public register of people eligible to vote in the UK, maintained by local authorities, and a confirmed entry at your current address is one of the data points credit reference agencies hold on your file. Lenders use it as a primary identity and address verification check.

Not being registered does not create adverse credit, but it weakens identity verification and can lower a credit score, slow a mortgage application or trigger requests for extra documents. Registering is free, takes effect within weeks, and is one of the quickest credit-file improvements available before applying.

A financial association is a link recorded on credit files between two people who have shared a financial product or application, such as a joint mortgage, joint bank account or joint loan. Simply living together or being married does not create one; a joint financial connection does.

When a lender assesses a mortgage application it can review the credit files of financial associates, so an associate's defaults, CCJs or insolvency can influence the decision even though they are not on the application. Associations persist after relationships end until disassociation is requested, which is why checking for old links is standard preparation.

A hard search is a full credit check that a lender records on your credit file when you formally apply for credit, visible to other lenders who search your file afterwards. A full mortgage application always involves a hard search, and some lenders also run one at the agreement in principle stage.

A single hard search has a small, short-lived effect, but several in a short period can lower a score and suggest credit hunger to underwriters. Hard searches stay visible on a credit file for 12 months and are typically factored into scores for around six months.

A High Court judgment is a court ruling that a debt is owed, issued by the High Court rather than the county court, typically for larger or more complex claims. Like CCJs, money judgments from the High Court are recorded on the Register of Judgments, Orders and Fines maintained by Registry Trust and reported to credit reference agencies.

A High Court judgment remains on a credit file for six years from the judgment date and is treated by mortgage lenders in the same way as a CCJ, with the higher amounts involved often pushing applications towards specialist lenders with judgment-value criteria.

An IVA is a formal, legally binding insolvency agreement, set up and supervised by an insolvency practitioner, under which a person repays an agreed portion of their unsecured debts over a fixed term, usually five or six years, with the remainder written off at the end. It applies in England, Wales and Northern Ireland; the broad Scottish equivalent is a protected trust deed.

An IVA is recorded on the Individual Insolvency Register and stays on a credit file for six years from its start date. Specialist lenders typically consider applications after completion, with terms improving as the entry ages and once the completion certificate is held.

Loan to value is a ratio that expresses the mortgage amount as a percentage of the property's value, so a 180,000 pound loan on a 200,000 pound home is 90 percent LTV. It is the single biggest driver of mortgage pricing alongside credit history.

In adverse-credit lending, LTV and credit severity work as a trade-off: the more recent or serious the adverse events, the lower the maximum LTV a lender will offer, with many specialist products capped at 70 to 85 percent. A larger deposit therefore widens lender choice and improves rates more for bad-credit applicants than for anyone else.

Manual underwriting is an assessment method in which a human underwriter reviews a mortgage application individually, reading the credit file, bank statements and the explanation behind any adverse events, rather than relying on an automated scoring model to decide. Most specialist and many smaller building society lenders underwrite this way.

For applicants with defaults, CCJs or past insolvency, manual underwriting is usually the realistic route to approval, because an underwriter can weigh context such as a one-off life event followed by clean conduct. The trade-off is slower decisions and more documentation than automated systems require.

Near-prime lending is a tier of mortgage lending that sits between mainstream high street products and full sub-prime ranges, designed for applicants with minor or historic adverse credit such as a small satisfied default or a few late payments. Several large lenders run near-prime ranges through intermediary brands.

Near-prime products price modestly above high street rates rather than at full adverse-credit levels, and their criteria typically tolerate adverse events that are over two or three years old. Many borrowers use a near-prime deal as a stepping stone, remortgaging to a mainstream product once their file has aged and repaired.

Negative equity is a position in which the outstanding mortgage balance is higher than the current market value of the property securing it, most commonly caused by falling house prices after buying at a high loan to value. The shortfall only crystallises if the property is sold or repossessed.

Negative equity is not a credit-file entry, but it blocks the normal remortgage route because no lender will advance more than the property is worth. Borrowers usually stay with their existing lender via a product transfer, overpay to rebuild equity, or wait for values to recover before switching.

A notice of correction is a short personal statement, up to 200 words, that you can add to your credit file at each credit reference agency to explain the circumstances behind an entry, such as a default caused by illness or redundancy. The agency must attach it to the disputed information.

Lenders are required to consider a notice of correction, which means an application touching that file is usually referred for manual review rather than scored automatically. That can help with specialist lenders who weigh context, but it can also slow decisions, so the notice is best reserved for genuinely mitigating circumstances.

A payment holiday is an agreed pause in mortgage or loan repayments that a lender grants for a limited period, with the missed amounts and accrued interest added to the balance to be repaid later. It differs from arrears because the lender has authorised the missed payments in advance.

An agreed payment holiday should not be reported as missed payments, and the Covid-era deferrals in 2020 and 2021 were specifically excluded from credit files. Lenders can still see the effect through bank statements and the higher balance, and recent or repeated holidays can prompt affordability questions on a new application.

A product transfer is a switch to a new mortgage deal with your existing lender when your current rate ends, without moving the loan to another lender. Most lenders offer product transfers with no new affordability assessment and no fresh credit check, provided the borrowing and the property stay the same.

For borrowers whose credit has worsened since they took their mortgage, a product transfer is often the only way to avoid moving onto the standard variable rate, because a full remortgage elsewhere would mean new underwriting against the damaged file. The trade-off is being limited to one lender's pricing.

Registry Trust is a non-profit organisation that maintains the Register of Judgments, Orders and Fines for England and Wales and holds equivalent public registers of court judgments for Scotland, Northern Ireland, Ireland, the Isle of Man and Jersey. Credit reference agencies buy this data, which is how CCJs and decrees reach credit files.

Anyone can search the register through Registry Trust's Trust Online service for a small fee, which is a reliable way to confirm whether a judgment exists, its amount, and whether it is marked satisfied before a mortgage application is made.

Repossession is the legal process by which a mortgage lender takes possession of a property after serious arrears, usually through a court possession order, and sells it to recover the debt. Any shortfall after sale remains owed by the borrower, and lenders can pursue it for years afterwards.

A repossession is among the most serious adverse events a mortgage underwriter sees, because it shows a previous secured loan failed completely. The associated default or arrears markers stay on a credit file for six years, and lenders also ask directly whether an applicant has ever had a property repossessed, with specialist criteria typically starting three or more years after the event.

Satisfied is a credit-file and court-register status that shows a debt behind a default or judgment has been paid in full, while partially satisfied means the creditor accepted less than the full balance to settle, and unsatisfied means the debt remains unpaid. The status changes; the entry itself does not disappear early.

A satisfied CCJ or default still runs its full six years on file, but the status matters to lenders: many require judgments and defaults to be satisfied before completion, some price unsatisfied debt more harshly, and a CCJ paid within one calendar month of judgment is removed from the register altogether.

Sequestration is the formal name for bankruptcy in Scotland, a court or Accountant in Bankruptcy process under which a person's assets vest in a trustee so that debts can be written off. A streamlined route, minimal asset process bankruptcy, exists for people with low income and few assets.

Discharge from sequestration normally comes after 12 months, and the entry stays on a credit file for six years from the award date as well as appearing on Scotland's Register of Insolvencies. Mortgage lenders treat sequestration exactly as they treat bankruptcy elsewhere in the UK, with waiting periods counted from discharge.

A soft search is a credit check that leaves no footprint visible to lenders, used for identity verification, eligibility checks, quotations and most agreements in principle. You can see soft searches on your own credit report, but they have no effect on your credit score and other lenders cannot see them.

Soft searches let mortgage applicants test eligibility across lenders without accumulating the hard-search footprints that damage a score, which is particularly valuable for adverse-credit borrowers whose files are already fragile. The full mortgage application that follows will always involve a hard search.

A sub-prime mortgage is a loan product designed for borrowers whose credit history falls outside mainstream lending criteria, offered by specialist lenders that price for the additional risk. Older terms include non-status, non-conforming and adverse-credit mortgages; modern lenders usually market them simply as specialist ranges.

Today's sub-prime market is far more tightly regulated than its pre-2008 predecessor, with full affordability checks required by FCA rules. Products carry higher rates and lower maximum loan to value than high street deals, tiered by the severity and age of the adverse credit, and most are available only through intermediaries.

A thin credit file is a credit record that contains too little account history for lenders or scoring models to assess reliably, common among young adults, recent arrivals to the UK, cash-preferring households and people returning from long periods abroad. It is an absence of data rather than adverse data.

A thin file can still cause mortgage declines, because automated scoring treats the unknown cautiously. Building entries such as electoral roll registration, a small managed credit card and reported rent payments thickens the file over six to twelve months, and manually underwriting lenders can assess thin-file applicants on bank statements instead.

A trust deed is a voluntary but formal insolvency arrangement available only in Scotland, under which a person transfers control of their finances to a trustee and makes contributions, normally for four years, after which remaining unsecured debts are discharged. Once it becomes protected, all creditors are bound by it.

A protected trust deed is the broad Scottish equivalent of an IVA and is recorded on Scotland's Register of Insolvencies and on credit files for six years from the start date. Mortgage lenders apply IVA-style criteria, generally requiring completion and discharge before considering an application.

A whole-of-market broker is a mortgage intermediary that can recommend products from across the full range of lenders available to brokers, rather than from a restricted panel or a single lender. The FCA requires firms to describe their service scope accurately, so the label signals breadth of access.

Whole-of-market access matters most in adverse-credit lending, because the specialist lenders that accept defaults, CCJs and past insolvency rarely deal with the public directly and their criteria vary widely. A broker who knows which lender tolerates which event, at what age and value, can place a case that an applicant approaching lenders alone would struggle to match.