Where do you stand?

How a lender actually reaches a decision

An adverse credit application doesn't get a single yes-or-no answer from a machine. It moves through a sequence of checks, and where you land at each stage depends on facts about your file that are fixed and facts about your current situation that aren't. Here's the shape of that sequence.

1. 1

   The lender searches your credit file

   Once you submit an application, the lender runs a hard search on your credit file, the kind of search that other lenders can see and that briefly affects your score. That's different from the soft search a broker sometimes runs early on, just to get a general sense of where you stand, which leaves no visible trace. The hard search is where the lender actually sees the CCJ, default, or other event already on your file.

   Soft search

   Gives a rough read on your file without leaving a mark other lenders can see.

   Hard search

   Recorded and visible to other lenders. This is where the real assessment starts.

2. 2

   The lender identifies what type of adverse credit is on file

   A CCJ, a default, a debt management plan (DMP), an IVA, bankruptcy, a missed payment and a repossession aren't interchangeable to an underwriter. Each gets checked against its own criteria, so a lender treating one old CCJ as minor might treat a DMP from the same year very differently. The pages on a CCJ and a default set out what each one is checked for on its own.

   Court and credit-file events

   CCJs and defaults are checked mainly for age, amount, and whether they've been satisfied.

   Formal debt arrangements

   DMPs, IVAs and bankruptcy are checked mainly for current status, discharge date, and conduct since.

3. 3

   Underwriting weighs what's fixed against what you can still affect

   The date of a CCJ or default is fixed and can't be changed, and neither can the amount it was originally for. What an underwriter can still weigh is your conduct since then: how you've managed credit and repayments in the months and years after, and the deposit or loan-to-value ratio (LTV, the size of the mortgage against the property's value) you're able to bring. The months right before you apply carry particular weight here, which the six-month pre-application guide goes through in more detail.

   Fixed

   The date, the amount, and the type of adverse credit recorded.

   Within your control

   Recent payment conduct, savings built up, and the deposit or LTV you can offer.

4. 4

   The application lands in a tier, or is declined

   Based on everything above, the lender places the application into a tier that reflects how it underwrites risk, from mainstream lenders who consider only minor or old adverse credit, through to specialist lenders who assess more serious or more recent cases individually. A decline from one lender reflects that lender's own criteria.

   Which tier applies is a judgement each lender makes on its own criteria.

   Mainstream lender

   Considers older, smaller, or satisfied adverse credit alongside strong current conduct.

   Specialist lender

   Assesses more recent or more serious adverse credit case by case, often against different criteria to high-street banks.

   Declined

   One lender's answer, on its own criteria.

This sets out a general mechanism, not a guaranteed sequence for any one lender. Individual underwriters weigh these factors differently, and no step here promises a particular outcome.