Quest to escape from the credit blacklist

You don't have to be a criminal or declared bankrupt to have an impaired credit rating - mortgage industry jargon for being a bad risk.

Forgetting to pay a household or credit-card bill can tarnish your record, while redundancy, self-employment and divorce can all lead to a rejection. The market analyst firm Datamonitor esti mates that up to 9m people are defined as non-standard for mortgage purposes.

Many are self-employed who may be well able to meet repayments but have difficulty proving an income. For these people, a special credit-impaired mortgage, complete with higher interest rates and tougher repayment terms, is often the only way to buy rather than rent.

Fortunately, more mortgages are hitting the credit-impaired market; some with flexible repayment terms and discounted periods. Many are from high street firms.

Some lenders allow a return to a standard high street interest rate after three years. And while most will want a deposit of between 10% and 20%, many will accept a 5% deposit.

However, the worse your credit history, the harder you will find it getting a mortgage and the more you will have to pay for it. Some top-end rates are 5% above base rates. As a credit-impaired customer, you are more likely to be subject to redemption penalties and higher processing charges.

Much will depend on how many of the "classic" credit problems you have had. These include having a home repossessed, missing debt repayments, having a debt-related county court judgment against you, being declared bankrupt, or being self-employed with less than three years' audited accounts.

If you have an account with a high street bank or building society it is worth starting your mortgage search there. Small local building societies might also prove flexible and understanding.

The problem with approaching lots of lenders is that all will run a search on you with credit reference agencies. If they refuse you, this will be listed against your credit history. When other lenders do their search, they will see the rejection and might be more likely to turn you down as well.

Many people consult brokers with experience in higher-risk mortgages. They can help reduce the time you spend looking and the number of times a credit search is done on you. Brokers should be part of the mortgage code. Check out charges in advance.