What is credit-impaired? Defined by the FCA (Financial Conduct Authority)
By TMG | 3rd June 2025
When it comes to getting a mortgage or other types of credit, your financial history matters. If you’ve had trouble keeping up with repayments or faced financial difficulties in the past, you might be classed as credit-impaired.
So, what it is the credit-impaired?
as define by the FCA.
a customer who:
(a) within the last two years has owed overdue payments, in an amount equivalent to three months' payments, on a mortgage or other loan (whether secured or unsecured), except where the amount overdue reached that level because of late payment caused by errors by a bank or other third party; or
(b) has been the subject of one or more county court judgments, with a total value greater than £500, within the last three years; or
(c) has been subject to an individual voluntary arrangement or bankruptcy order which was in force at any time within the last three years. (FCA 2025)
So, what does this mean for getting a Mortgage?
Being credit-impaired doesn’t mean the you cannot get a mortgage. However, it might mean that fewer lenders will be willing to offer you a loan, interest rates may be higher, or you may need a larger deposit. Specialist lenders exist to help people in your situation. These lenders assess your individual circumstances, not just your credit score.
You can improve your credit score!!
That’s right!! if you are looking to get a mortgage after credit issues, here are some steps you can take.
Check your credit report - make sure you identify the issues.
Pay everything on time - even small bills like phone bills or utilities bills can help you with your credit score.
Avoid new credit - taking more debt can effect your affordability and credit score.
Save for the bigger deposit - the more money you put down the better rate you can get.
Speak to a mortgage advisors - they can help you find the specialist lenders that lend to credit impaired customers.
Credit problems happen for all sorts of reasons such as job loss, illness, or unintentionally miss the payment. Having a bad credit doesn’t mean that you cannot get a mortgage. With the right guidance and some careful planning, it's entirely possible to get back on track and achieve your goal of buying a home.
Source:
FCA (2025), Credit-Impaired. Available at: https://www.handbook.fca.org.uk/handbook/glossary/G2950.html (Accessed 03/06/2025).
