Many property buyers worry that a less-than-perfect credit history might prevent them from getting a bridging loan.
The good news?
Credit checks aren’t always required for bridging finance, and even when they are, they’re less important than you might think.
How Bridging Loans Work: A Quick Overview
Bridging loans work quite differently from standard mortgages.
They’re short-term property loans that can last between 3 and 24 months. Think of them as a temporary funding solution that helps you complete a property purchase or project when timing is tight.
The real advantage of bridging finance is speed – while mortgages often take weeks or months to arrange, it is possible to complete a bridging loan in 3-5 days.
These loans prove particularly useful in several situations.
Take property auctions, for example – when you need to complete within 28 days, a standard mortgage simply isn’t fast enough. They’re also perfect for preventing property chains from breaking or funding quick renovation projects.
We even see them used for buying properties that traditional mortgage lenders won’t touch, like homes without kitchens or bathrooms.
Read more: A Guide to Bridging Loans
Credit Checks in Bridging Finance: The Facts
Here’s what really matters about credit checks and bridging loans: unlike traditional mortgage lenders, bridging providers can take a much more flexible approach to credit history.
Some specialist non-status lenders don’t perform standard credit checks at all, while others might run them but place less emphasis on the results.
Why this flexibility?
Because bridging loans are primarily asset-based lending.
The property or land you’re using as security matters more than your credit score. That said, some situations still call for credit checks, particularly with regulated bridging loans (those secured against your home), larger loans, or when you’re seeking the lowest interest rates.
Read more: Do Bridging Loans Affect Credit Scores?
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What Matters More Than Credit History?
When assessing a bridging loan application, lenders focus on several factors that often carry more weight than your credit history.
The security property itself usually tops the list – its value, condition, and marketability all play major roles in the decision.
Your exit strategy comes next – how you’ll repay the loan.
This might involve selling the property, refinancing to a traditional mortgage, or using proceeds from another property sale. Lenders need to feel confident that your strategy is realistic and achievable within the loan term.
The amount of deposit or equity you have available also influences decisions significantly. Most bridging lenders look for at least 20-25% deposit or equity, though requirements vary based on your circumstances and the property type.
Read more: What Properties Can A Bridging Loan Be Secured Against?
Getting a Bridging Loan with Poor Credit
If you’re concerned about your credit history, you’ll be pleased to know that many borrowers successfully secure bridging finance despite past credit problems.
However, expect some differences in the terms offered.
Interest rates will be a bit higher and you might also need to provide additional security or a larger deposit. That said, if you have experience in property development or investment, this can often outweigh credit concerns in a lender’s assessment.
Read more: Can you get a bridging loan with bad credit?
The Application Process Explained
The bridging loan application process is surprisingly straightforward.
It starts with an initial discussion about your requirements – the amount needed, purpose, exit strategy, and security property details.
If the lender likes your proposal, they’ll issue an agreement in principle, often within 24 hours.
Next comes the property valuation, followed by legal work including property searches and loan documentation. The whole process moves much faster than traditional lending, with funds often released within days or weeks rather than months.
Making Your Application Stronger
Success with bridging finance often comes down to presentation.
Focus on the property’s value and your exit strategy rather than any credit concerns. If you do have credit issues, be upfront about them – explain what happened and how you’ve resolved the situation.
Having your documentation ready helps too. You’ll need proof of ID and address, details of the security property, and evidence supporting your exit strategy. Any relevant property experience or track record can strengthen your case.
Related reading: What are some common exit strategies for bridging loans?
Working with Brokers
A good broker can make all the difference when seeking bridging finance.
They’ll know which lenders might best suit your situation and what rates you can expect. They can also advise whether alternatives might work better for your needs.
Brokers will help to present your application in the best way, and manage things until you get the money.
Read more: Mortgage Brokers: A Guide
Next Steps
While some bridging lenders do look at credit history, many focus more on other factors – particularly the security property and exit strategy.
Every application is unique, and bridging finance offers more flexibility than traditional lending.
Ready to explore your options?
Our recommended brokers can help find the right solution for your needs, even if you have credit concerns. They’ll take time to understand your situation and match you with suitable lenders.
Contact us today to discuss your bridging loan requirements with our experienced partners.
Frequently Asked Questions
Yes, many bridging lenders will consider applications despite poor credit history. They focus more on the property’s value and your exit strategy, though you might pay higher interest rates.
Read more: Can you get a bridging loan with bad credit?
No, not all bridging lenders require credit checks. Some specialist lenders focus solely on the property value and exit strategy when making lending decisions.
Non-status loans don’t even require a credit check to take place, speeding up the application process. Max LTV is generally 70% for these.
Initial enquiries usually involve ‘soft’ credit checks which don’t impact your score. A full application might require a ‘hard’ check that shows on your credit report.
Read more: Do Bridging Loans Affect Credit Scores?
Yes, refinancing options exist regardless of credit history. The terms available will depend on your exit strategy and property value.
Read more: Can You Pay Off a Bridging Loan with Another Bridge?
Yes, commercial bridging loans focus more on the property value and business plan than personal credit history.
Not necessarily. Many lenders consider applications with CCJs, focusing instead on the security property and exit strategy.
Read more: Can you get a bridging loan with bad credit?
