The words lenders use, explained in plain English

Adverse credit is an umbrella term covering several quite different things, and a lender does not read them the same way. A County Court Judgment, a default, and a single missed payment can all sit on one credit file, yet an underwriter treats each on its own terms. This glossary works through the words you are likely to hear from a lender or broker, so that a conversation about your own file makes sense as it happens.

The record itself

CCJ (County Court Judgment) is a court order made against you for a debt you did not pay, issued after a creditor takes the matter to court. It stays on your credit file for six years from the date it was registered, whether or not you have since paid it. The CCJ page sets out why its age and size matter more to a lender than the fact of its existence.

Default is a formal marker a lender adds to your file when an account is treated as broken. It sits a step below a CCJ and a step above an ordinary missed payment.

Missed payment is a payment due date that passed without the money arriving. One missed payment three years ago reads very differently to a lender than three missed payments in the last six months.

Debt management plan (DMP) is an informal arrangement, usually set up through a debt charity, where you pay a reduced amount each month split between your creditors. It has no fixed legal end date, unlike an IVA.

IVA (Individual Voluntary Arrangement) is a formal, legally binding agreement between you and your creditors, typically running five to six years, that sets reduced repayments in exchange for writing off what remains at the end.

Bankruptcy is a legal process that clears most unsecured debts. It carries the longest-lasting effect on a mortgage application of anything on this list, because it signals formal insolvency.

Repossession is what happens when a lender takes back a property because the mortgage on it stopped being paid. It relates directly to how someone managed a previous mortgage, which is why lenders read it as directly relevant to the one in front of them.

What a lender checks on your file

Credit file is the record held by credit reference agencies of your borrowing and repayment history. It is what a lender is actually looking at when deciding whether to lend.

Credit tier is the informal band a lender places an applicant in, based on the type, age, and severity of adverse credit on file. Tiers are not standardised, so a profile that fits one tier at one lender can fit a different tier at another.

Hard search leaves a visible mark on your credit file and can affect your score slightly. It is usually carried out when you formally apply for credit. Soft search leaves no such mark, so it is often used for eligibility checks or quotes and can be done without that effect.

Words to do with resolving and assessing debt

Satisfaction means a CCJ or default has been marked as paid in full. A satisfied CCJ still appears on your file until the six years pass, but most specialist lenders treat a satisfied entry more favourably than one left unpaid.

Loan-to-value ratio (LTV) is the mortgage amount expressed as a percentage of the property's value. A lower LTV, meaning a larger deposit or more equity, gives a lender more room to consider an application with adverse credit on file.

Specialist lender is a lender that underwrites adverse credit applications as a routine part of its business. The directory of specialist lenders sets out which product types and underwriting approaches different firms use.

Underwriting is the process a lender goes through to decide whether to offer a mortgage and on what terms, weighing the credit file alongside income, deposit, and the property itself. This is the part that is more judgement than arithmetic.

For how any one of these applies to your own situation, the guides section works through each type of adverse credit in more detail.