The Intermediary – October 2025 - Flipbook - Page 16
RESIDENTIAL
Opinion
Adverse credit,
automatic exclusion?
I
n conversations about
creditworthiness, there is
still a tendency to focus solely
on borrowers with clean
histories. That approach
is easy to understand,
particularly from a risk management
point of view. However, brokers
working on the ground will recognise
that the reality is far more nuanced.
Many borrowers have experienced
some form of financial setback, and
that alone should not disqualify them
from access to fair mortgage lending.
There’s been a lot of talk about
affordability and criteria tightening,
but we’re still seeing strong demand
from buyers. According to UK
Finance, the number of homeowner
mortgages in arrears of 2.5% or more
fell to 87,380 in Q2 2025, representing
a 3% drop from the previous quarter.
These figures suggest that the vast
majority of borrowers, even those
with past credit events, are managing
their finances effectively and meeting
their commitments.
For some, adverse credit is still
treated as a red flag, but I think that
overlooks a crucial point: most credit
issues are temporary and rooted in
a specific life event. Redundancy,
illness, divorce or the rising cost of
living can all contribute to missed
payments or short-term defaults. Yet
in many cases, the borrower has since
stabilised their finances and rebuilt.
present a detailed account of the
borrower’s circumstances, explain
the reason behind credit issues,
and provide supporting documents
that demonstrate both progress and
recovery. I believe that a single missed
payment from 2021 can look very
different when accompanied by two
years of stable income, improved
financial behaviour and clear
affordability.
In these situations, communication
between broker and underwriter
becomes invaluable. Lenders that are
open to discussion, and brokers who
are willing to provide a full picture,
can oen arrive at a decision that
works for everyone involved.
I think it’s likely that we’ll see
more borrowers with imperfect
credit histories seeking these types
of mortgage options. The fact is, cost
pressures remain and affordability is
still tight.
At the same time, millions of
people have taken steps to rebuild
their financial health and are now in a
CLAIRE ASKHAM
is head of mortgage sales
at Buckinghamshire
Building Society
stronger position than their credit file
alone might indicate.
According to the latest research
from Experian, it can take as lile as
six months to start improving a low
credit score. That is a relatively short
timeframe, yet many lending models
still place far too much weight on
past issues.
With the right lender, a wellstructured application and clear
supporting evidence, adverse credit
does not have to be the end of the road.
It can be the start of a well-considered
conversation that leads to a positive
and sustainable outcome for a host
of borrowers who have experienced
a minor, or even a major, credit blip
along the way. ●
Lending evolution
To reflect this, like many other
lenders operating in this space, we
have updated our lending approach
and worked hard to make our criteria
clearer, so brokers can tell straight
away where we might be a good fit.
That saves everyone time, and it
gives brokers that bit more certainty
when placing cases that fall outside the
usual parameters.
These relationships are essential
when assessing adverse credit cases.
We see brokers as ideally placed to
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The Intermediary | October 2025
Red flag: Simple setbacks should not bar borrowers from entry
