Knowledge is power

Adverse Credit Study

Financial matters play a significant role in everyone’s lives, and, for most people, a mortgage is the largest financial commitment they will ever make. So, as a mortgage lender, it is important that we take the time to better understand our customers, their attitudes and behaviour.

The latest edition of the study, released in January 2022, features insights into the latest adverse credit trends, the role of brokers, money management and mental health.

The Adverse Credit Study provides important insights into the millions of people who have experienced a blip on their credit file. By reading the study, our intermediary partners will better understand the circumstances and concerns of their customers through the research conducted. These findings have provided Pepper Money with crucial data to adapt to trends in the market and produce product ranges more accessible to a broader group of borrowers who are facing limitations due to experiencing adverse credit.

Want to find out more about our findings?

Our adverse credit study is an in-depth look at adverse credit and its impact on mortgage customers

Adverse credit trends

Our Adverse Credit Study helps our intermediary partners and Pepper Money to better understand customer trends to continue driving financial inclusion and to cater to a broader customer base, offering products and services that meet growing consumer needs.

The study identified the most common cause of adverse credit is missing a credit payment, other factors such as decreased income due to the pandemic, being put on furlough, lost their job, being self-employed, reduced pay, and being off sick.

18% out of 6.29million people with adverse credit intend to purchase a property (to live or let out) in the next 12 months, 1,132,000 potential mortgage customers.

Key Findings

Adverse credit trends

0 m

People with adverse credit planning to buy a property in the next 12 months, rising from 880,000 in the Spring report of people looking to buy property has increased to 18%.

1 %

of people looking to buy property has increased to 18%. The overall percentage of people with adverse credit has remained consistent at 12%.

The role of brokers

0 %

of people with adverse credit looking to buy a property in the next 12 months would speak to a broker to help them get a new mortgage. This is up from 44% six months ago.

Money management

1 %

of people with adverse credit have increased their level of debt in the last 12 months. This is up from 13% in the Spring report.

1 %

of people with adverse credit say that a £100 increase in their bills would significantly impact their finances.

Mental health

1 %

of people with adverse credit are ‘very concerned’ about
their mortgage application being declined. This is up from 12% in the last wave.

1 %

Nearly half of people with adverse credit say their current financial position negatively impacts their mental health.

Money Management

Amount of debt excluding mortgages

Whilst 12% of people with adverse credit don’t have any debt, almost half (47%) currently have between £1,001- £15,000 of debt. This is relatively consistent with the previous wave.

More than 1 in 10 (12%) have more than £15,000 in debt currently. Men are 10% more likely to have outstanding debt over £5,000 than women (64% vs 54% for women)

The changing level of debt

Change in level of debt over last 12 months

Nearly a third (32%) with adverse credit have increased their outstanding debt compared to 12 months ago. Whereas 28% have decreased their debt, and 29% reported no change.
Whether or not someone has increased their
level of debt is somewhat linked to age:

  • 35% of 25-34 year olds have increased their debt, compared to 18% of those
    aged 55+
  • 38% of those aged 55+ have decreased their debt, compared to 24% of
    18-24 year olds

Concerned about declined mortgage applications

How concerned are you about having your mortgage declined because of your credit history?

Two thirds (59%) of those adults with adverse credit planning to purchase a property in the next 12 months are concerned about having their application declined due to their credit history.

However, more than a third (36%) of those who had experienced adverse credit before purchasing the home they currently live in said that it did not impact their ability to get a mortgage. Only 8% said they were declined for a mortgage the first time they applied.

Mental health

Confiding in someone they know

48% of people with adverse credit say that their current financial position negatively impacts their mental health. However, two fifths (41%) do not believe that their financial position negatively impacts their mental health.

Half (50%) of people with adverse credit would be uncomfortable talking to someone they know about their finances, with 27% feeling somewhat uncomfortable at the thought and
22% very uncomfortable. However,
more than four in 10 (42%) would feel
comfortable talking to someone they
know about their finances.

The role for brokers

The role of brokers in helping customers with adverse credit to find a mortgage is becoming increasingly understood. It is promising to see more people with adverse credit are seeking guidance from a mortgage broker (54%) as part of their process of identifying a suitable mortgage. The second most popular resource was the option of going directly to their bank (37%). Online (28%) presence would be vital to encourage consumer enquiries. Moreover, the ability for brokers to establish positive outcomes could culminate in referrals from family (28%) and friends (29%).

Our mission is to help more customers find a lending solution to meet their needs and mortgage ambitions. It is imperative that brokers and lenders alike create accessible solutions and easier processes to encourage financial inclusion.

Which, if any, of the following would you go to for advice on getting a mortgage?

Our previous reports

Adverse Credit Study Spring 2021

Find out all you need to know about the impacts of adverse credit.

Download Report

Adverse Credit Study Autumn 2020

Find out all you need to know about the impacts of adverse credit.

Download Report

Adverse Credit Study Spring 2020

Find out all you need to know about the impacts of adverse credit.

Download Report

Adverse Credit Study Spring/Autumn 2019

Find out all you need to know about the impacts of adverse credit.

Download Report

For Intermediary use only

About Pepper Money

Pepper Money is the brand name used globally by all Pepper Group companies to market consumer finance products. In the UK, Pepper Money offers a range of residential, buy to let, and second charge mortgages to borrowers.

Pepper Money is part of the Pepper Group, a diversified, global financial services business, whose senior management team is some of the most experienced in the UK mortgage industry having built a long-lasting reputation for creating innovative, flexible home loan products and services.

Pepper money

UK Mortgage Lending Ltd (UKMLL) t/a Pepper Money is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 710410 as a provider of regulated mortgages. The FCA does not regulate our Buy to Let mortgages. UKMLL is a member of the Finance and Leasing Association and follows its Lending Code as a provider of second charge regulated mortgages. Registered Office: 4 Capital Quarter, Tyndall Street, Cardiff, CF10 4BZ. Registered in England and Wales under Company Number 08698121.

Information

First Charge Service Levels

Intermediary - First Charge

Working on DIP referrals received on:

27th May

Responding to application portal broker messages on:

27th May

Reviewing applications sent to our underwriters on:

27th May

Working on applications received on:

27th May

Currently reviewing valuations received on:

27th May

Answering calls in less than (average speed):

< 1 Minutes
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