Can You Get a Mortgage with Bad Credit in Scotland? (2026 Guide)

★ Key Takeaways

• Yes, you can get a mortgage with bad credit in Scotland – specialist lenders exist specifically for this purpose
• You'll typically need a larger deposit (15-30%) and rates may be 1-3% higher than standard deals
• Most specialist lenders are intermediary-only, meaning you must apply through a mortgage broker
• Credit issues older than 2-3 years are viewed more favourably – time is your friend
• Scotland has specific legal terms and fewer lenders (~40 of 70 UK lenders operate here), making broker advice especially valuable

If you've had credit problems in the past, you might think that getting a mortgage in Scotland is impossible. I hear this from clients all the time, and I'm always glad to tell them the same thing: bad credit doesn't automatically mean you can't get a mortgage.

The mortgage market has changed enormously in recent years. There are now specialist lenders who focus specifically on borrowers with less-than-perfect credit histories. The key is knowing where to look, understanding what lenders are looking for, and presenting your application in the best possible light.

In this comprehensive guide, I'll explain exactly what counts as "bad credit," how it affects your mortgage options in Scotland, and the practical steps you can take to improve your chances of approval. I'll also cover the Scotland-specific factors that make our market unique.

"Bad credit" is a broad term that covers a range of issues on your credit file. Not all credit problems are treated equally – lenders look at the type, severity, how recent it was, and whether it's been resolved. Here's what typically falls under the "bad credit" umbrella:

• CCJs (County Court Judgments) or Decrees – In Scotland, these are called Decrees. They're court orders to repay money you owe and stay on your credit file for 6 years
• Defaults – When a creditor formally records that you've failed to meet the terms of an agreement
• Missed or late payments – Even a single missed payment can affect your credit score
• IVAs (Individual Voluntary Arrangements) or Trust Deeds – Scotland uses Protected Trust Deeds instead of IVAs
• Bankruptcy or Sequestration – Scotland's equivalent of bankruptcy is called Sequestration
• Debt Arrangement Scheme (DAS) – A Scottish Government scheme to help repay debts without bankruptcy

Understanding what lenders look for in your credit score is the first step towards understanding where you stand.

Let me be upfront: having bad credit will affect your mortgage in two main ways – the deposit you'll need and the interest rate you'll pay. But it doesn't have to stop you entirely.

Deposit Requirements

While mainstream borrowers might get away with a 5-10% deposit, bad credit applicants typically need 15-30% of the property's value. The more serious the credit issue, the larger the deposit required. This is because a bigger deposit reduces the lender's risk – if they need to repossess and sell, they're more likely to recover their money.

Interest Rates

Expect to pay 1-3% more than the best rates advertised in the market. So if the best 2-year fix is around 4.23%, you might be looking at 5.23-7.23% depending on the severity of your credit issues. That's still considerably better than a Standard Variable Rate, and as you rebuild your credit over the term, you can remortgage onto better deals later.

The Specialist Lender Market

Here's the crucial detail many people miss: most specialist lenders who deal with bad credit are intermediary-only. That means you can't apply to them directly – you must go through a mortgage broker. This is actually one of the biggest reasons to work with a broker if you have credit issues, as they'll have access to lenders you simply can't reach on your own.

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Even with bad credit, there's plenty you can do to strengthen your mortgage application. Here are the practical steps I recommend to every client in this situation:

1. Check Your Credit File with All Three Agencies

Different lenders use different credit reference agencies – Experian, Equifax, and TransUnion. Your file can vary between them, so check all three. You might find errors that can be corrected, or discover issues you didn't know about. I always recommend using CheckMyFile as it shows your data across all three agencies in one place.

2. Save a Bigger Deposit

This is the single most powerful thing you can do. A larger deposit reduces the lender's risk and opens up more products. If you can stretch from 15% to 25%, the difference in available lenders and rates can be dramatic.

3. Let Time Pass

Time is genuinely your friend here. Credit issues that are more than 2-3 years old are viewed much more favourably than recent ones. After 6 years, most adverse markers fall off your credit file entirely. If you can afford to wait and build up your deposit in the meantime, your options will improve significantly.

4. Avoid Multiple Applications

Every time you apply for credit, a "hard search" is recorded on your file. Multiple applications in a short period make you look desperate for credit and can further damage your score. This is another reason to use a broker – we know which lenders are likely to accept your profile before submitting an application, avoiding unnecessary credit searches.

5. Start Rebuilding Your Credit Now

Even small steps make a difference. Get on the electoral roll, set up direct debits for bills, and consider a credit builder card (used responsibly). My guide on improving your credit score for a mortgage has detailed, practical steps you can start today.

Getting a mortgage with bad credit in Scotland comes with some unique factors that don't apply elsewhere in the UK:

• Fewer lenders operate in Scotland – approximately 40 of the 70+ UK mortgage lenders lend on Scottish properties, which makes broker access even more important
• LBTT, not Stamp Duty – Scotland uses Land and Buildings Transaction Tax with different thresholds and rates
• Home Reports are provided by sellers – this actually benefits buyers as you get a free survey before making an offer
• Different legal terms – Sequestration (not bankruptcy), Decrees (not CCJs), Protected Trust Deeds (not IVAs). Make sure your broker understands these differences

How long after bankruptcy/sequestration can I get a mortgage?

Most lenders require at least 1 year after discharge from sequestration, with 3+ years preferred by the majority. Some specialist lenders will consider applications as soon as you're discharged, though these deals typically require a 25-30% deposit and come with higher rates. After 6 years, the sequestration drops off your credit file entirely, opening up mainstream options.

Will a missed payment from 5 years ago affect my mortgage application?

A single missed payment from 5 years ago will have very little impact. Most mainstream lenders will overlook it, especially if the rest of your credit history is clean. The key factors are how recent the issue is, how severe it was, and whether it's part of a pattern. One blip years ago is very different from regular missed payments.

Can I get a joint mortgage if only one applicant has bad credit?

Yes, but the bad credit will still affect the application since both applicants are assessed. Some lenders are more flexible than others in these situations. In some cases, it may be worth the person with good credit applying as a sole applicant (if their income supports the borrowing) to access better rates, though this means only one person is on the mortgage deed.

Should I use a debt management plan before applying for a mortgage?

It depends on your situation. A Debt Arrangement Scheme (DAS) – Scotland's statutory debt management plan – protects you from enforcement action while you repay debts. However, being on an active DAS can make it harder to get a mortgage. If your debts are manageable, paying them off individually might be better for your mortgage prospects. A broker can advise on the best strategy for your specific circumstances.

Life happens – job losses, relationship breakdowns, health problems, and the cost-of-living crisis have all pushed good people into difficult financial situations. Having bad credit doesn't define you, and it absolutely doesn't have to stop you from getting on the property ladder in Scotland.

At McGhie Mortgages, I work with specialist lenders across the market who understand that credit histories don't tell the whole story. I'll assess your situation honestly, tell you what's realistically achievable, and find the right lender for your circumstances – whether that's now or after some credit repair work.

Ready to explore your options? Book a free, confidential consultation and let's find out what's possible for you.