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CCJs should not block customers from affordable finance – Seal

by: Steve Seal, director of Sales and Marketing, Bluestone Mortgages
  • 29/06/2018
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CCJs should not block customers from affordable finance – Seal
The number of registered County Court Judgements (CCJs) is at its highest rate on record, according to data released by the Registry Trust Limited.


This now marks the fifth year of increased rates, suggesting that more individuals are struggling financially.

At the same time, however, the total value of CCJs has never been lower, suggesting that borrowers are not having issues with large payments, but smaller bills or loans.

Whilst Bank of England figures have shown inflation falling to 2.5% in March, this does not necessarily translate into the reality of people’s day to day lives.

With rental and house prices increasing year-on-year, it is becoming increasingly hard for borrowers to save up for a deposit, with tenants on average, spending half of their disposable income on rent alone.

Combine this with additional expenses on top and this is clearly putting a strain on many people’s income.

For those already on the line, it must feel like there is no margin for error.

However, life can, and will, throw at us unexpected events which we simply cannot be prepared for, such as an accident, divorce, or illness.

As a result, events like these are going to cause financial difficulty and the possibility of missing one or two credit payments, which, if not resolved, can lead to your client’s credit history being branded with a CCJ for six years.

CCJs do not always represent irresponsible repeat offenders; in many cases, these individuals have simply hit a bump in the road.

What’s more, CCJs are often guilty of causing a vicious cycle for borrowers. The damage that a judgement can do to a client’s credit history can make high-street affordable deals completely unobtainable, and again, further tighten the bottleneck on their already restricted finances.


Perception of CCJs

Thankfully, perceptions of CCJs are already changing amongst some lenders.

Research by Moneyfacts last year showed that almost 700 adverse credit mortgage products were available on the market.

However, most of these products are from specialist lenders, and almost all customers with a CCJ will be turned away by high street lenders.

So, more still needs to be done to change perceptions.

The rise of CCJs hints at a larger scale problem that is set to continue.

As such, lenders must regularly communicate with their clients to ensure that they are made aware of all available options, and brokers must use their expertise to offer sustainable, and realistic, lending solutions.


CCJs shouldn’t block access to affordable finance

As an industry, we need to ensure that there are a range of products available to meet the needs of those with adverse credit.

For example, we have five different credit category ratings for our customers depending on the number of CCJs and other circumstances, as we understand that not all adverse credit customers should be grouped together under one category.

With this approach, specialist lenders can look at a borrower’s individual circumstances on a case-by-case basis and understand the reasons why the adverse credit occurred.

This detailed analysis of a borrower’s income and expenditure patterns can give a far better insight into affordability than simple credit scores alone.

A CCJ doesn’t mean the customer deserves to be blocked from affordable finance.

Underneath the statistics lie genuine borrowers who have encountered unforeseen and costly events and as ever, specialist lenders will continue to support this underserved market in their aspirations towards home ownership.

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