CCJs rising but missed payments drive adverse growth

This means that the first half of 2019 was close to the record number of CCJs recorded in 2017, when 592,522 CCJs were issued in just six months.

That’s a lot of potential clients who could have a CCJ on their credit record. Despite these numbers, CCJs are not the most common reason for people to fail a credit score. Analysis of Pepper 6 to Pepper 24 completions from 2018, for customers with incidents of adverse credit within the last two years, shows that many more customers had defaults on their credit record than CCJs. And even more customers, nearly 90% had missed payments on their credit file.

Your clients don’t need to have been taken to court for an outstanding debt in order to fail a credit score, they don’t even need to have had a credit account go into default. Missing payments on their credit commitments alone could see their mortgage application rejected by a high street lender.

With so many monthly commitments, such as mobile phone bills, broadband, utilities and car payments, people have more opportunities to trip up and miss one or more regular payments. One missed payment may not necessarily result in a failed credit score, but if it’s combined with other factors that are assessed negatively by a scoring system, such as not having a long enough period in current job, moving house too frequently, or having a thin credit file, then the case could be dismissed.

Specialist lenders, that individually assess every application, don’t need to rely on a score, so can take a pragmatic view of any missed payments and make an assessment as to whether these are indicative of ongoing financial strain, or just someone who has had some blips in the past. Some specialist lenders can even ignore missed payments or small defaults on utility, communication or mail order accounts.

A failed credit score is not always the result of significant credit issues. Sometimes your clients will benefit from a specialist approach if they have just a few recent missed payments. CCJs may be rising, but it’s smaller incidents like missed payments that are driving force behind the growing demand for adverse credit mortgages.