How to explain bad credit to a mortgage adviser

Explaining bad credit to a mortgage adviser is mainly about being clear and factual: what happened, roughly when, and what has changed since. Advisers who work regularly with adverse credit cases are used to a wide range of situations, and their main task is matching your circumstances to a lender likely to consider them, not judging how the CCJ, default or other issue arose.

What to include in your explanation

A useful explanation usually covers:

• What the issue is. A CCJ, default, missed payments, mortgage arrears, an IVA, bankruptcy, a debt management plan, or a low credit score, and roughly when it happened.
• Why it happened, briefly. For example, a job loss, illness, a relationship breakdown, or a dispute with a company you did not realise had become a CCJ. You do not need to over-explain, just give enough context to make sense of it.
• Whether it is resolved. Whether a CCJ or default is satisfied, whether an IVA or DMP has completed, and the approximate date, since this affects how a lender is likely to view it.
• What has changed since. Steady income, a stable job, no further credit problems, or simply time passing, are all relevant to show the issue is not an ongoing pattern.

An illustrative example of two approaches

Consider two people with the same CCJ from three years ago, satisfied within the last year, for illustration only. One says only “I had some money trouble a while back, it’s sorted now” when asked. The other explains that the CCJ arose from a dispute with a former supplier during a period of reduced income, was satisfied last year once the debt was confirmed and paid, and that their income and payment history since has been stable. The second explanation gives an adviser far more to work with when matching them to a suitable lender, even though the underlying facts are identical.

Why being upfront usually helps more than staying quiet

A lender’s credit check will find a CCJ, default or other adverse credit whether or not you mention it, so there is little advantage in leaving it out. An adviser who knows the full picture from the start can rule out lenders unlikely to consider your situation and focus on ones that might, which can mean fewer declined applications and fewer hard searches on your file. Our guide on why using a specialist broker can help covers this in more detail.

How much detail is too much?

There is a balance between giving useful context and over-explaining. A sentence or two on why something happened is usually enough; a long, detailed account of every event leading up to it is rarely necessary and can make it harder for an adviser to pick out the facts they actually need, such as the date and whether it is resolved. If you are unsure how much to say, start briefly and let your adviser ask follow-up questions if they want more detail.

If your situation is still ongoing

Not every situation is neatly resolved. If you are still in a debt management plan, still repaying a DMP or IVA, or your mortgage arrears are being managed under an arrangement with your lender, say this clearly rather than describing it as finished. An adviser needs to know your current position accurately, since a lender’s approach to someone actively in an arrangement is generally different from their approach to someone whose situation ended some time ago. Our pages on remortgaging with a debt management plan and remortgaging after an IVA explain how each is typically viewed while still ongoing.

Written explanation letters

For a more significant credit event, some lenders ask for a short written explanation, sometimes called an underwriter’s letter of explanation, alongside your application. This is usually a brief, factual account similar to what you would say to an adviser in person: what happened, when, and what has changed since. Your adviser can tell you whether the lender they are recommending needs one, and can usually help you draft it so it covers what the underwriter is likely to want to know.

What if you don’t fully understand your own credit file?

It is common not to recognise every entry, particularly an old CCJ from a company you do not remember dealing with, or a default that was passed to a debt collector under a different name. Say this plainly to your adviser rather than guessing. Our guide on what to do about a CCJ you don’t recognise explains how to trace where it came from, and if you believe an entry is genuinely wrong, our guide on correcting errors on your credit file sets out how to challenge it.

What this means for remortgaging with adverse credit

The clearer and more consistent your explanation, the easier it is for an adviser to match you to a realistic lender the first time, rather than trying more than one and adding unnecessary hard searches to your file. This matters across every type of adverse credit, whether you are remortgaging with a CCJ, defaults, or as a self-employed applicant where income evidence and credit history are both being assessed. Our guide on what a mortgage adviser will ask you sets out the typical questions in more detail, so you can prepare your explanation before the conversation rather than during it.