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Credit repair options for adverse clients – Denman-Molloy

by: Tom Denman-Molloy, intermediary sales manager at Mansfield Building Society
  • 12/02/2024
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Credit repair options for adverse clients – Denman-Molloy
The number of people with a history of adverse credit continued to increase in 2023 as the cost-of-living crisis, higher interest rates and ongoing challenges in the wider economy continued to have an impact on consumer affordability.

Figures from mortgage broker, The Mortgage Expert, show that 2,846 consumer county court judgements (CCJs) were issued every day in England and Wales from January to March 2023 alone, a 14.1 per cent increase on the same period in 2022.  

Similarly, data from UK Finance reveals there was a slow but steady uptick in the number of borrowers falling into mortgages arrears, with numbers increasing by 2.5 cases a day in the first quarter of 2023.  


Continued challenges in improving conditions 

Despite the fact that the Bank of England recently revised its outlook for inflation to reach its target of two per cent in May 2024, the current and challenging economic conditions facing the UK look set to persist for much of the year as the effects of the last 12 months continue to filter through to homeowners.  

As a result, many more borrowers are likely to have experienced financial challenges that may have resulted in a missed or late payment as they struggled to keep their finances on track in an environment of uncertainty.   

This is likely to lead to growing demand among consumers for more versatile borrowing options that take into account the increased pressure on household budgets, by offering a more sympathetic and considered approach to their circumstances and giving them the flexibility they need to get their finances back on an even keel.  


An alternative to the ‘tick box’ mentality 

Typically, this demographic of borrowers is often underserved by the mortgage market and many frequently find themselves falling foul of the tick box mentality of many mainstream high street lenders, leaving them somewhat high and dry. 

However, with many more borrowers likely to fall into this category as the year unfolds, catering for their needs will be crucial, which is where specialist lending products specifically designed to meet the needs of this demographic come into their own.  

For example, Mansfield Building Society’s recently launched credit repair proposition has been designed to help borrowers who have experienced past credit problems such as missed payments, defaults, CCJs and even bankruptcy, as well as those currently seeking relief through active debt management plans (DMPs).  


Broadening the scope for brokers and their clients 

Catering to the needs of those with historic adverse credit or those who have suffered a temporary blip in their finances is crucial in helping to address the challenges facing borrowers in the current economic climate.  

It is also useful for those brokers looking to help clients repair their credit rating as it broadens the scope of products available when sourcing solutions for this type of borrower. 

By enabling these borrowers to access finance, meet repayments and prove their creditworthiness over the term of the loan, brokers and lenders can work together to provide good outcomes for them and maintain a healthy mortgage market. 

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