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A Comprehensive Guide to Bad Credit Commercial Mortgages

When you have bad credit, it can feel like getting a mortgage to finance your commercial property purchase is an impossible feat. But don’t despair just yet it is possible to get the funding you need, even with less-than-perfect credit. Read on to learn more about how to get a bad credit commercial mortgage.

What is a Bad Credit Score in the UK

In terms of mortgages, a bad credit score is anything below the minimum credit score to obtain a mortgage in the UK. For a standard mortgage, the minimum credit score is 640. This is based on data from Experian, one of the UK’s leading credit reference agencies. The minimum credit score required by other lenders may be higher or lower, depending on the specific lender’s criteria. However, 640 is generally considered the minimum score needed to get a “normal” mortgage from a mainstream lender in the UK. Bad credit scores normally stem from applicants having missed payments defaults or ccjs.

Credit Issues Acceptable to UK’s Commercial Mortgage Lenders

When it comes to credit, commercial mortgage lenders are generally more lenient than banks or other traditional lenders. That’s because they understand that businesses sometimes fall on hard times and may have a few blemishes on their credit reports.

Thus, there are a number of different credit problems that commercial mortgage lenders in the UK will accept. For example, many lenders will accept a small amount of missed payments on a previous mortgage. They may also accept a higher level of debt than would be acceptable for a residential mortgage.

However, there are some credit problems that will disqualify an applicant from being approved for a commercial mortgage. These include bankruptcy, foreclosure, and serious delinquencies on previous debts. In general, the more severe the credit problem, the more difficult it will be to obtain a commercial mortgage.

As a result, it is important to carefully consider all of your options before applying for this type of loan.

2 ways to get bad credit commercial mortgages

There are two ways to get a commercial mortgage with bad credit: a conventional or a private lender.

Conventional lenders are banks, credit unions, or online lenders that offer loans that are backed by the government (such as the Small Business Administration). These types of lenders usually have stricter credit requirements, so if your credit score is on the lower end, you may have difficulty qualifying for a loan. However, if you do qualify, you’ll likely get a lower interest rate than you would from a private lender.

Private lenders are individuals or groups of investors that provide loans that are not backed by the government. Because they’re not bound by the same regulations as traditional lenders, they’re often more willing to lend money to people with bad credit. However, private loans usually come with higher interest rates and fees.

How to get a commercial mortgage with bad credit

You can manage a commercial mortgages from 2 sources but what steps should you follow to increase the chance of getting accepted and get the best rate? This is what you can do.

1. Pull your credit report and score.

The first step is to pull your credit report and score from all three major credit bureaus—Experian and Equifax.. This will give you an idea of where you stand in terms of your credit history and what lenders will see when they run a credit check.

2. Work on improving your credit score.

If your credit score is low, there are things you can do to improve it. One thing you can do is make sure you pay all of your bills on time, every time. Additionally, you can try to reduce your debt-to-income ratio by paying down some of your existing debt.

3. Find a co-signer.

If you have bad credit, one way to increase your chances of getting approved for a loan is to find someone with good credit who is willing to cosign the loan with you. This person will be responsible for repaying the loan if you default on it, so make sure you choose someone you trust and who is financially stable.

4. Look into alternative lenders.

If traditional lenders are unwilling to give you a loan because of your bad credit, there are alternative lenders out there who may be more willing to work with you. These lenders typically charge higher interest rates than traditional lenders, but they may be more flexible in their underwriting standards.

5. Offer collateral.

Another way to increase your chances of getting approved for a loan is to offer collateral—something of value that the lender can seize if you default on the loan. This could be something like property or stocks and bonds. Keep in mind that if you default on the loan, the lender will take possession of the collateral, so make sure it’s something you’re comfortable losing if worst comes to worst.

6. Speak to mortgage brokers

Applying for a mortgage can be daunting, especially if you have bad credit. However, speaking to a mortgage broker can help to make the process easier. Mortgage brokers are experts in the field and can provide you with guidance and advice on the best way to obtain a mortgage. In addition, they have access to a wide range of lenders and can help you find one that is willing to work with you despite your bad credit. While there is no guarantee that you will be approved for a loan, speaking to a mortgage broker is a wise first step in securing the financing you need.


Bad credit doesn’t have to mean the end of your commercial property dreams. While it may be more difficult to get approved for financing, it’s still possible to get the funding you need by working with the right lender and taking steps to improve your financial situation. Follow these steps to increase your chances of getting approved for a bad credit commercial mortgage and moving forward with your development project.