Many people continue to have misconceptions around CCJs and how these can impact their ability to apply for mortgages, according to research by Pepper Money.
The firm’s latest Specialist Lending Study has found over a quarter of people (26%) think they need to wait at least five years after receiving a CJJ before they can apply for a mortgage.
This is despite over half of people (66%) saying they understand what CJJ is.
At the same time, the survey revealed a higher proportion of people had experienced adverse credit in the last three years.
The survey found that 4% of people had received a CCJ in that time, with 11% missing a credit payment and default being recorded in 7% of cases.
A further 6% said they had entered a debt management plan in the last three years, with 5% having secured arrears. The main reason for missing payments was difficulty managing money (30%) with 27% blaming reduced income over this period.
Commenting on the findings, Paul Adams, sales director at Pepper Money (pictured above, right), said this was the highest level of adverse credit activity seen since the research started in 2020.
“There remain some significant misconceptions about the impact that adverse credit can have on a mortgage application, with more than a quarter of people believing they would need to wait at least five years after a CCJ before applying for a mortgage,” said Paul.
“The reality is that many people with a CCJ could still have a successful application within months of it being registered. This presents a big opportunity for brokers to work with existing customers and new customers to challenge the misconceptions and help more people to achieve their goals.”
Encouraged by the fact more people are aware of their credit profile, Jon Stones, managing director at Mortgage 1st Business (pictured above, left), said it was important for brokers to help educate clients better about their options.
“Unfortunately, just a little knowledge can be a dangerous thing,” said Jon. “If we allow these misconceptions to continue, thousands of people could be missing out on accessing the mortgages they need to help them achieve their goals.”
