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Adverse credit, emotions and breaking the taboo of specialist lenders

ended 10. January 2023

A Newspage broker, Emma Jones of The Bank Says No, has noted how a lot of the people she works with are embarrassed or scared to speak to a mortgage broker because their situation is a little bit more complex or they have some adverse credit and were rejected by the high street. Some Qs:

  • In your experience, are clients embarrassed about having complex circumstances or a blip (or some other adverse) on their credit file?
  • What %, roughly, of your clients have adverse credit? Has it increased in the past six months?
  • What % of your business, currently, goes to specialist lenders and do you expect this to increase in 2023 as people really start to struggle amid the COL crisis?
  • Do you believe a taboo exists around specialist lenders, and what can be done to remove it?

8 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The majority of new business clients, that aren’t referrals from existing clients, will have some sort of impaired credit. The high street lender, direct, is the first port of call for those with a squeaky clean report so we don’t tend to see these clients unless they are referred from our existing base. Those who come direct with impaired credit don’t seem to have embarrassment, nor should they, about their finances. There are loads of reasons someone can get into financial difficulty and nobody, especially brokers, should judge someone based on their credit score.

With the economy is crisis, specialist lending is going to become an even more important area of business with more and more clients needing expertise in this area. High street lending will become much more narrow as they look to lessen their bad loan book.
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Craig Fish
Director at Lodestone Mortgages
Very few of my clients have adverse credit, but just recently I have started to see more new inquiries where very light adverse credit such as one late payment, has become a feature. For me, the adverse is so light that many mainstream lenders are happy to assist, but there are a growing number of lenders who are improving their criteria in this specialist field. I think this along with debt consolidation may become a real feature in 2023. I don't feel there is a taboo around specialist lenders, but I do believe that clients are a little embarrassed about past credit issues. Several people, I have spoken to say they just stick with their current lender for fear of refusal by a new lender who may offer a better rate.
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Justin Moy
Managing Director at EHF Mortgages
I find that clients are reluctant to provide details of the full situation, to make the situation look as 'good' as possible, not realising that the background checks Brokers and lenders will undertake will give that missing information. No one likes rejection, and the embarrassment should it be one person within a joint application that has subsequently caused higher rates and overall costs. We have seen an increase in cases where there are credit blips, we normally work on around 5% of clients with adverse issues, but we are over 10% this year so far. For Homemovers, the estate agents need to stop being negative towards those who need specialist lenders. How many times I am asked who the lender is by the agent, and that has influenced if the offer has been accepted or not. That just adds to the negative mindset and embarrassment.
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Kylie-Ann Gatecliffe
Director at KAG Financial
Around 50% of our clients have some form of adverse. We noticed a significant increase throughout the pandemic, due to clients missing payments etc who’s income had dropped - especially self employed clients. Some clients do get really embarrassed about going through their situation, but we do a lot of discussion via our social media around adverse credit and complex situations, to hopefully break the taboo on this area. The UK has seen a rocky few years, so expecting clients to have a perfect credit history is like asking the sky to never rain. We work closely with specialist lenders and have done for many years, in all honesty we often see better service from them than a lot of the high street lenders. Most cases are looked at my actual humans and a common sense approach of underwriting works well for those clients that have had issues.
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Samuel Gee
Director at Manning Gee Investments Limited
To some, credit blips feel like the mental health crisis of the mortgage application process. To others, not a care in the world - apart from the higher cost that goes with it.

Credit blips can happen so easily, from a couple of missed payments on a mobile phone contract or a default registered for a few pounds, causing havoc to that mainstream deal the customer wants. Clients are usually reluctantly upfront about this, and we are always more than sympathetic with them - sometimes even managing to remove the issue with our help enabling that mainstream deal.

We are getting from the simple blip to the extreme, and one in four of our cases have some form of credit issue, with definitely an upwards trend as people adapt during the cost of living crisis, higher interest rates and rising inflation.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
There is most certainly a sense of embarrassment with people when they have credit blips, a lot is made of having a perfect credit score, so when they know it’s less than great they are hesitant. But just like going to a doctor with an embarrassing problem, mortgage brokers have seen it all before (and worse!). The key is to be completely honest and don’t try to hide anything or play it down - it will all come out eventually anyway, so be upfront about it and we can ensure your application goes to the right lender for your situation. Specialist lenders also suffer from this embarrassment factor; some people don’t like the idea of a specialist because then people “will know I have bad credit” just by the name of the lender. The truth is that specialist lenders help in all sorts of situations, not just poor credit.
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Amit Patel
Adviser at Trinity Finance
Around half of my clients have had historic credit issues some of whom were too embarrassed to discuss the story behind it.

As the cost of living crisis deepens with no immediate end in sight I can see this number increasing over the next 12-24 months.

We should not be embarrassed simply because our mortgage is with a specialist lender they do a great job in helping borrowers onto the property ladder or to re-mortgage as they take a common sense approach to lending.
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Graham Cox
Director at Bridging Hub
Probably 1 in 3 of our enquiries are from people with moderate to severe adverse credit. We expect to see more of this over the next year as the cost of living crisis continues to bite. Many would be borrowers do feel embarassed which is understandable but unnecessary.

The biggest issue facing applicants with adverse face is the cost of the mortgage. Many will be facing mortgage rates of between 6 and 8%. For many it will be unaffordable unless the loan size is small or they have an excellent income.