Paul Adams: Painting a picture

Paul Adams: Painting a picture

Paul Adams is sales director at Pepper Money

At Pepper Money, we have recently completed the second round of our ongoing research into the attitudes and characteristics of potential mortgage customers with adverse credit.

The study was undertaken in February amongst a nationally representative sample of more than 4,000 adults. Of these, 598 (around 15%) had experienced adverse credit, defined as having missed credit payments or loans, and/or had a county court judgment or debt management plan within the last three years.

This timeframe was chosen as it is typically those clients who have experienced adverse credit within the last three years who are generally better served by specialist lenders rather than the mainstream.

Based on the latest Office for National Statistics projection for the UK adult population of 52.4 million, we can estimate the number of people considered to have adverse credit to be 7.86 million.

While 15% of adults have experienced adverse credit in the last three years, the research also revealed that 41% have missed more than one credit payment in their lifetime. That’s more than 21 million people.

It’s a big section of the population, and with a growing number of ways for people to take credit, such as the ‘buy now, pay later’ service Klarna and the proliferation of personal contract purchase car finance, there are many potential hazards that could trip your clients and leave a mark on their credit record.

So, it’s important that you are well equipped to help your clients with adverse credit.

Here are some of the insights that we have gained from our research about people with adverse credit:


The research found that adverse credit impacts people across all age brackets. Perhaps unsurprisingly, the category with the fewest people who have experienced adverse credit is those adults with the least financial experience, aged between 18 and 24. Across all other categories, even older borrowers over the age of 55, there is a relatively even split.


There is also a fairly even split across gender, although this round of research found that slightly more of those with adverse credit were female (53%).

Social Grade

More surprising perhaps is the continuing trend from the previous wave of research, which found that the majority of adults who have experienced adverse credit in the last three years are from the more affluent ABC1 social grade (53%), as opposed to the less affluent C2DE grade (47%).

Types of credit issue

Of the 15% of UK adults who have experienced adverse credit within the last three years, 11% had missed a credit payment and 5% had missed several consecutive payments on a credit card, loan or agreement, which resulted in a default.

A further 4% had missed payments on an unsecured loan that remained unpaid for more than 30 days, and 4% had entered a debt management plan.

Despite the frequent dialogue about the growing number of CCJs, only 3% of the group had registered a CCJ in the past three years.

Current outstanding debt

Adults with adverse credit in the last three years have less outstanding unsecured debt than you might expect. According to the research, 53% of adults with adverse credit in the last three years currently have less than £5,000 of debt (excluding mortgages and student debt) and 14% have no debt at all.

To put this in some context, the Trades Union Congress recently said that average unsecured debt per household had reached £15,385.

According to the study, only 11% of adults with adverse credit in the last three years have more than £15,000 in unsecured debt currently.

Those aged between 45 and 54 are the most likely to have more than £15,000 (15%), and 55+ year olds are the most likely to not currently have any debt (25%).

Plans to buy a home

This is the statistic that is most relevant to you, and the one that should make you sit up and be excited by the opportunity to help a growing number of clients.

Of the 7.86 million people who have experienced adverse credit in the last three years, the research found that 17% are thinking about buying a property in the next 12 months. This means that 1.34 million people may need support from a broker.

This number has increased by nearly 80,000 since the last time Pepper Money conducted its Adverse Credit Study, last October, and demonstrates a growing opportunity to help borrowers buy a home or refinance.

The increase has been driven by more people with adverse credit intending to purchase buy-to-let properties to rent out in the next year, and this highlights an important growth market for your business.