Five myths about adverse credit

1. Adverse credit clients all have defaults and CCJs

Your clients don’t need to have received a County Court Judgement (CCJ) or had an account placed into default in order to fail a lenders credit score. At Pepper Money, the most common financial blip across our customers with adverse credit is actually missed payments.

2. All adverse credit borrowers need high LTV mortgages

Our experience indicates that cases with more adverse tend to also have a lower LTV. Products with a maximum LTV of 70% are the most popular amongst customers with more recent incidents of adverse credit.

3. Adverse credit mortgages are always on low value properties

Adverse credit doesn’t necessarily mean a low value property. At Pepper Money, a significant number of our cases are on properties valued at more than £400k, and we have some adverse credit customers whose properties are valued at more than £800k.

4. It’s mainly younger people who haven’t learned to manage their money who need adverse credit mortgages

This simply isn’t the case. The majority of Pepper Money customers with adverse credit are aged 36 or above and almost half of our customers with the most recent incidents of adverse credit are aged 46 or over. Adverse credit is normally the result of a life event, such as divorce, redundancy or illness, rather than naivety when it comes to dealing with finances.

5. Adverse credit mortgages are for low earners

This is another example where perceptions are markedly different to the reality. The most common income bracket for Pepper Money customers with adverse credit is £40k - £50k. This is considerably higher than the average advertised salary for an employee in the UK, which was £35,058 a year in February this year, according to research by job search engine Adzuna.

So, when it comes to clients with adverse credit, the chances of them getting a mortgage might be a lot higher than you think.