Why near prime is not just for those with prior payment problems – Castling

They may have had a life event, like an illness or a job loss, which has caused the borrower to fall behind with certain bills, and the resulting black marks on their record mean they no longer meet the criteria for prime mortgage deals.

While it’s true that these borrowers account for a large proportion of near prime activity, there is a separate subset who are held back by a thin credit file. They aren’t being restricted because of previous problems, but instead because of a lack of information about their capacity for handling credit.

This distinction was highlighted by our latest Near Prime Index, published in April, covering the experiences of brokers in the second half of 2025. When we polled brokers on the primary reasons for their clients falling into near prime, around 15% pointed to the lack of an extensive credit history. It’s more keenly felt among those taking their first step onto the housing ladder too, with over a quarter of brokers reporting it’s a particular problem for first-time buyers.

Brokers have long expressed frustration with the way lenders can group borrowers who fall outside of prime criteria. This is a clear example of where a more nuanced approach is needed. In reality, the advice process and lender assessments will differ for those with no credit history compared with those who have had the odd blip along the way.

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Addressing invisibility

According to an analysis by credit agency Experian, there are currently up to five million people in the UK who are effectively invisible to the credit system. There can be all sorts of reasons for their lack of a comprehensive credit profile, but it can have a significant impact on their ability to borrow.

As lenders, we need to not only recognise this challenge, but ensure we have processes in place to ensure that such borrowers are not unduly punished because of their thin credit file. Without access to alternative routes to finance, there is a danger these borrowers are effectively frozen out of homeownership. Equally, as an industry, we should welcome steps to increase the number of data sources used when building a credit profile, such as incorporating rental history.

The path back to prime

The ‘thin file’ challenge also highlights the fluid nature of a borrower’s credit status. Today’s near prime borrower can easily be tomorrow’s prime borrower, as they build a fuller picture of their ability to manage credit responsibly and so meet more of the prime criteria.

That improvement in status should then be reflected in the rate offered to the borrower when they look to refinance. Mainstream lenders like us, who offer both prime and near prime finance, and reassess the credit status of a remortgaging borrower as a matter of course, will be the go-to lenders for clients with thin files. We have a duty to make the path to prime as straightforward as possible.