As the name suggests, if you are considered to be 'credit impaired' it means that your credit history is not ideal. CCJ's, defaults, missed credit payments, and bankruptcy all have an adverse effect on mortgage applications. Many 'high street' lenders will refuse you on these grounds alone!

Or perhaps you have fallen into arrears on a previous mortgage, which may not be your fault. For example, on divorce many people are advised by their solicitors to stop making mortgage payments on their property until the affairs are sorted out.

As one in four marriages end in divorce, that is potentially a lot of people in arrears. You may have been declared bankrupt at some point. Again, this may have been out of your hands. Or you may be turned down by a lender simply because you have a county court judgement (CCJ) against your name.
You can incur a CCJ for not paying a utilities bill or just for skipping a book club payment.

Well, all is not lost.
Far from being outlawed to the shed at the bottom of the garden, these days, there are companies who specialise in bad credit cases and the differential in rates between a mortgage involving bad credit and ordinary mortgages has reduced significantly in recent years. 

I frequently deal with such cases and have access to lenders who accept applications from persons with bad credit history.