Adverse credit doesn’t mean mortgage denied

Mislabelled and locked out: lenders fight back against mortgage myths

THERE ARE several dangerous misconceptions plaguing the mortgage sector right now – not the least of which revolve around so-called ‘adverse credit clients’. With more and more people grappling to get a mortgage in the current cost-of-living crisis, and with inflation rising, these harmful myths are holding both customers and brokers back. Clients being labelled ‘adverse’ over something as minor as a missed bill is a lingering frustration in the market − and Paul Adams, sales director at Pepper Money, believes it’s doing real damage. “I don’t think anybody likes to be labelled as an adverse credit customer,” Adams tells Mortgage Introducer. “It has negative connotations around the pre-credit crisis … the term is not something that people enjoy being labelled as, and [it] probably is still used far too much.”

And when it comes to underwriting, MT Finance is equally passionate about striking a key balance between being responsible in lending and providing inclusive access − an approach that hinges on open communication and empathy. “We believe that inclusive access doesn’t have to come at the expense of responsible lending,” Edwards says. “As an award-winning lender focused on effortless service every time, over the years, we’ve developed a comprehensive underwriting framework that prioritises responsible lending while remaining accessible. “We achieve this balance through a multi-layered approach incorporating key underwriting principles, including detailed case-by-case assessment, where we take a holistic view of the application in line with our lending criteria to offer the best solution for our clients. We thrive on clear communication to help achieve a

That investment is visible in Pepper’s results. As Adams reveals, they’re consistently above 80% in terms of converting applications into offers, averaging 20 days from full application to mortgage offer. And, in many cases, Pepper Money is actually much faster than that. Why? One of the most important practices they’ve introduced is simple but effective: a phone call on day one. “We call the broker and just run through a few details of the case,” says Adams. “It gives us that ability to ask a few questions and tick them off then and there instead of sending emails and requesting more documentation. A broking firm typically has the same underwriter handling all their cases. Any broker from that firm has full access to that person, not just for processing the application but for new enquiries as well.”

At Pepper Money, it’s a similar story, as they take a broader underwriting approach to see the full story behind a file rather than the headline of a score − something that’s gained them quite a following. After all, the types of customers falling outside high street lending criteria are shifting – and that’s due not just to adverse events but to broader lifestyle and income changes. “Through our own studies in the specialist market, we know that the number of customers that have experienced some type of credit blip over the last three years is at a record high,” Adams explains. “That’s not surprising given that we’ve been through a traumatic period with the cost-of-living crisis.”

Yet, despite this, many of those customers still pass traditional credit scoring metrics. “Some can still pass the credit score profiles that the high street banks want,” adds Adams. “But it depends on how strong the rest of the case is.” Even minor issues, such as recent self-employment, complex income structure or debt-to-income imbalances, can stop a client from getting through automated systems used by big lenders. That’s where Pepper positions itself. “Where somebody might fail the credit score or not pass the high street banks’ rules … we badge that as just off the high street,” Adams says. “That’s the type of customer we aim to support. And, crucially, not all these clients have adverse credit. A big chunk of our business − as much as 40% − has no adverse credit. It’s more to do with other external factors, such as complex income, self-employment or high debt-to-income ratios.” This nuance is often missed by brokers, many of whom still assume specialist lending is synonymous with problem credit. That misconception, Adams argues, is holding the market back. “We work really hard to remove some of those [misconceptions] through broker events and one-on-one meetings,” he adds. “The biggest one for me is that a broker feels that supporting a specialist-type customer is going to be a hell of a lot more work. And in some scenarios that will be true, depending on the complexity. But in terms of a lender to deal with, we work so hard to make sure the experience is as seamless as the high street.”

Pepper Money is a broad specialist lender. We exist to help people succeed. Championing individuality. Looking for opportunities to say yes, rather than reasons to say no. We understand that brokers have a range of different needs, because their customers do, too. We’re here to help both parties fulfil their ambitions. By offering simple, inclusive products. By having a human approach to decision making. By being easy to work with. And by providing specialist expertise that can always be relied on.

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MT Finance is a market-leading property finance lender specialising in commercial, buy-to-let mortgages, and bridging loans. The company excels at delivering fit-for-purpose specialist loans at speed, and their approach to lending is something they have been consistently recognised for within the specialist finance industry. Established in 2008, the company has won multiple awards, including Best Bridging Finance Provider at the Business Moneyfacts Awards in 2025, 2022 and 2021; Best Service from a Bridging Finance Provider at the Business Moneyfacts Awards in 2024, 2023, 2020, 2019, 2018 and 2017; and Best Short-Term Lender at the Mortgage Strategy Awards in 2019.

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And brokers are taking full advantage. “They love talking to underwriters,” notes Adams. “It cuts out grey areas, makes things clearer and makes it quicker to get answers. And that direct relationship model is a key driver of faster offers and higher conversions.” Still, some brokers shy away from this type of business altogether − even when clients walk in the door needing exactly this kind of help. And that avoidance can have real consequences. “We still see brokers who decide this isn’t for them,” Adams adds. “And, at times, the way that’s done leaves that customer in a sort of limbo. They’re left thinking, ‘I can’t get a mortgage, so I’m going to have to carry on renting for the rest of my life.’ That’s not true. It’s about how you make customers feel when you don’t engage with these cases or refer them on.” At MT Finance, they’ve also seen real-time tangible results. As Edwards tells Mortgage Introducer, the firm recently had a situation where the team needed to review a client’s circumstances during extenuating conditions.

“The landscape will continue to be driven by a greater understanding of the limitations of traditional credit scoring and a growing recognition of the diverse financial circumstances individuals face”

Marylen Edwards, MT Finance

In Partnership with

And this kind of black-and-white assessment isn’t serving borrowers − or the brokers advising them. Another lender who understands the perils of being labelled as having ‘adverse credit’ is MT Finance. Speaking to Mortgage Introducer, Marylen Edwards, director of mortgages, explained that the firm is fighting against these challenges with an arsenal of innovative products and solutions. “MT Finance’s buy-to-let Tier 2 product directly addresses the significant challenge faced by borrowers with adverse credit who are often excluded by high-street lenders,” says Edwards. “For us, our approach goes beyond traditional tick-box lending, and we specifically designed our Tier 2 product to address this gap by taking a more pragmatic and holistic view of our clients’ unique circumstances, focusing on understanding each individual case to provide tailored solutions. As an asset-based lender, this enables us to place greater emphasis on the underlying property and its income-generating potential, which can be a crucial factor for borrowers with past credit issues.”

A snapshot of mortgage lending in the UK

“Self-employed customers have a much lower confidence level of getting a mortgage than employed customers,” he says. “And people who’ve had adverse credit − say a CCJ − often think they need to wait five years before applying. We know that’s not true. Lenders like us have policies around six months or 12 months.” These misconceptions are deeply embedded. But Adams believes there’s a clear way forward: getting the message out, loudly and consistently. “One of the best ways to do that is through media. We’ve got some really good spokespeople in our industry, and a lot are appearing on TV now, which is good to see.” For Edwards, looking ahead, she believes the sector will be defined by its constant evolution – a thought that’s as exciting as it is fast-paced. “The landscape will continue to be driven by a greater understanding of the limitations of traditional credit scoring and a growing recognition of the diverse financial circumstances individuals face,” she says. “We’re likely to see increased awareness of credit invisibility and a greater emphasis on alternative financial options, which could open doors for those with limited credit history or past issues.” For Adams and Pepper Money, the future aim is simple: remove the stigma, improve access and educate both brokers and borrowers on the real scope of mortgage possibilities beyond the high street. “We’re not just a last resort,” Adams adds. “We’re a real option − and for many, the right one.”

“A big chunk of our business − as much as 40% − has no adverse credit. It’s more to do with other external factors, such as complex income, self-employment or high debt-to-income ratios”

Paul Adams, Pepper Money

This is because, at its core, the issue isn’t isolated to serious defaults or long-term debt problems. Often, it’s simple life events − missed post during a house move, a parking fine that slipped through the cracks − that result in clients being categorised unfairly. “To badge them as an adverse-credit-type customer, or poor-credit-rating-type customer, feels unfair for something that’s relatively simple and straightforward,” Adams adds. “Everything else in their life has been paid on time. Life events come along unexpectedly − illness, divorces and such – it all impacts people. They may take their eye off the ball for a second and things slip through the net.”

Industry experts

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

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Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

Dealing with ‘credit blips’

Paul Adams

Pepper Money

Marylen Edwards

MT Finance

Edwards is responsible for developing and implementing MT’s buy-to-let proposition and underwriting practices, with 28 years of experience. Edwards began her career as a mortgage and commercial manager with Lloyd Bank in 1994, before spending 10 years as a BTL and commercial broker. Since then, she has held several senior roles, including positions at Metro Bank and Axis Bank.

MT Finance

Marylen Edwards

Adams has over 23 years of experience and insight into the mortgage industry. As sales director, he works closely with intermediary leaders to identify concerns and commercial opportunities Pepper can help to address. His longstanding relationships allow Adams to shape the changes Pepper makes to ensure we provide the most suitable products and criteria for more mortgage customers. Embodying the Pepper ethos, Adams places transparency and honesty as central pillars. This, combined with consistent ambitious growth both personally and professionally, ensures Pepper’s sales team is motivated and equipped to support a wide range of broker partners.Adams is committed to well-being, and he has become a Pepper and industry champion in this area, leading by example and sharing his evolution and journey, which in turn can inspire others.

Pepper Money

Paul Adams

The power of a phone call

Published June 14, 2025

In Q4 of 2024, banks and building societies lent £68.78 billion in new mortgages That figure accounts for a 30% rise year on year In the same period, over half of buyers put down a deposit of at least 25% 55% of buyers borrowed at least three times their annual income

Sources: The Money Charity, Houz Mortgages

Source: Pepper Money

The overall percentage of people with adverse credit has remained consistent at 12% 54% of people with adverse credit looking to buy a property in the next 12 months would speak to a broker to help them get a new mortgage. This is up from 44% six months ago 32% of people with adverse credit have increased their level of debt in the last 12 months. This is up from 13% in the Spring report 81% of people with adverse credit say that a £100 increase in their bills would significantly impact their finances

Adverse credit trends

positive outcome for our clients, and we will manually review applications declined by the automated checks if we are made aware of any issues.”

Taking a holistic view

“By disregarding unsecured debt on Tier 2 and considering up to a status 3 on secured arrears between 24 and 36 months, we were able to help the client who had already been turned down elsewhere. We only needed to look at one element of adverse credit from three years ago, from when they had suffered some financial strain due to unforeseen circumstances that impacted their finances.”

‘The more we help, the more we’ll end up doing’

At the end of the day, if more brokers embraced the specialist lending space, the impact on access to homeownership would be substantial. “The more customers we help into homeownership, the more they talk to friends and family and refer others,” Adams says. “So, the more we help, the more we’ll end up doing.” Public perception is another battle entirely. Adams points to a disconnect between what customers think is possible and what is actually achievable.

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