Five things we learned when we researched the adverse credit market

At Pepper Money, we wanted to find out more about those who have experienced recent credit problems who also plan to buy a property, and how they will go about it.

That’s why we commissioned YouGov to survey a total of 4,163 British adults to find out the truth about how many people might be considered to have adverse credit, how many of them are planning to buy a property and how their credit record influences their plans. Here are five things that we learned.

1. 15% of people have had a form of adverse credit in the last three years

According to the research, 15% of all participants surveyed had 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. This means we can estimate the number of people considered to have adverse credit to be 7.86 million, based on a total UK adult population of 52.4 million, according to the ONS.

2. 1.26m people might need an adverse credit mortgage in the next year

Of those 7.86 million people, 16% said they have the intention of purchasing 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 a broker in the next year alone.

3. Adverse credit is most common amongst people who are the prime age to be homebuyers and remortgagors

The majority of people who have experienced adverse credit in the last three years are aged between 35-44 (45%). This compares to 35% who are aged between 18-34, and 20% who are 55+.

4. It’s also not just those who are less affluent, who pick up adverse credit on their record

Nearly two thirds (63%) of UK 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.

5. We have work to do to educate customers about their choices and the benefits of mortgage advice

A staggering 93% of people don’t know they may be able to get a mortgage with a CCJ registered as recently as 6 months ago and only four in 10 people with adverse credit who are looking to buy a property in the next 12 months say they would speak to a broker. More people (44%) say they would go directly to their bank and even more (58%) would seek advice from family and friends.