Why intermediaries can't afford to ignore adverse credit cases

Dale Jannels | Impact Specialist Finance
21st November 2019
Dale Jannels
"In the modern mortgage market, intermediaries can ill-afford to ignore cases which land on their desks which do not fit with the mainstream tick box approach."

The festive period is traditionally a time for giving, but for some people - especially those with a family to support - it can prove to be a difficult one to successfully manage.

It is a season where we see more people, from all walks of life, seeking some form of supplementary borrowing, a factor which can generate additional monetary worries and financial stress, perhaps even leading to adverse credit down the line.

On a positive note, more forums and sources of advice/information are readily available for people to discuss topics which may have previously been considered taboo and difficult to address. Although money matters and financial education are areas where there is certainly still room for plenty of improvement. With this in mind, it was great to see the recent Adverse Credit Study from Pepper Money help shed some light on the world of adverse credit to encourage greater understanding and more open discussion around this subject matter. After all, this is an area which is not going away anytime soon. According to the research, a large portion of the UK adult population has experienced some form of adverse credit. 15% of all participants surveyed reported that they had previously missed payments on credit commitments; had CCJs, defaults, secured or unsecured arrears registered on their credit file; or had entered a debt management plan (DMP) in the last three years.

Understanding how, where and when people are likely to be affected is an important part of this process. The research outlined that adverse credit is most common amongst people who are the prime age to be homebuyers and remortgagers. The majority of people who experienced adverse credit in the last three years are said to be aged between 35-44 (43%). This compares to 33% who are aged between 18-34, and 23% who are 55+. It’s also important to point out that it’s not just the less affluent proportion of society who pick up adverse credit on their record. The report added that 61% of the adults who have experienced adverse credit in the last three years and are planning to buy a property in the next 12 months are associated with a higher income.

So, what does this mean for the intermediary market?

The survey suggested that, of those potential 7.86 million people who have experienced some form of adverse credit in the last three years, 16% intend to purchase a property (to live in or let out) in the next 12 months. This equates to 1.26 million potential mortgage customers with adverse credit who may need support from the intermediary market within the next 12 months. Add the fact that a staggering 93% of all respondents did not realise it is possible to get a mortgage with a CCJ registered as recently as six months ago, and it’s abundantly clear just how many opportunities are available for the intermediary market to capitalise upon.

In the modern mortgage market, intermediaries can ill-afford to ignore cases which land on their desks which do not fit with the mainstream tick box approach. If it’s obvious that a high-street lender isn’t the obvious answer then it doesn’t mean that it should be the end of the enquiry, far from it. There are always answers to be found for those who know how to source the right kind of deals for such clients or who have relationships in place with specialists who steer them and their clients in the right direction.

So why not look to utilise the skills of a specialist distributor? There are over a million reasons to suggest that it might just be worth it.

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