What kind of debtor are you?

credit report

what kind of debtor are you?

How do you borrow?

All day every day we speak to mortgage applicants with blemishes on their credit history – late payments, defaults, County Court judgements, debt management plans, bankruptcies and individual voluntary arrangements.

The latest fashion is the payday loan, and we regularly see mortgage applicants who have no need of payday loans who have taken them having been misinformed that it would improve their credit rating.

Like people, credit files are unique and for a bad credit specialist mortgage broker each credit file will have its own challenges. One day we can be dealing with an applicant who has had fraudulent activity on their account through no fault of their own, the next with an habitual non-payer.

But what kind of debtor are you?

Most of us take on debt early in our adult lives, this is particularly the case since the advent of the student loan system where the Government seems to actively encourage young people to consider debt is a necessary part of life – attitudes have certainly changed in the past 40 years.

As attitudes have changed, the market for credit has grown and grown and it seems that every week there is a new product on the market offering a new way to owe money and pay interest.

Mortgage lenders of course need to work with the market as it sits, and therefore they appreciate that the vast majority of applicants will have taken some credit in the past – also they will probably have some active credit when they apply for their mortgage – lenders do not have a problem with this.

But a mortgage lender does need to understand how you may behave when you take credit. This will inform them on how you are likely to behave with regard to your mortgage and whether you pose a particular risk for them and their money.

So what kind of debtor are you?

Debt Adverse Debtor

The Debt Adverse Debtor lives by their debit card and probably does not own a credit card. They may well have avoided taking any student lending and would never consider hire purchase or car lease arrangements.

They will present to us with a good sized deposit but very little credit history on their file.

The Debt Adverse Debtor is attractive to most mainstream lenders where there is sufficient deposit and credit history for the two ends to meet on the credit score.

They may very occasionally find problems with higher loan to value credit scoring -this is where we can assist.

Debt Adverse? Call us now on 020 8979 9684

Reluctant debtor

The Reluctant Debtor is an individual that only takes debt on when they absolutely have to.

As soon as they have debt, or perhaps before they even taken it, they are considering how they can best pay it off as quickly as possible.

A reluctant debtor may come to us with a student loan and a few hundred pounds on a single credit card that is cleared monthly.

As you might expect, a reluctant debtor is a great prospect for the mortgage lender as they have a record of paying all their debt regularly in full and on time.

We can help them take advantage of their credit profile to obtain optimum rates.

Reluctant? Call us now on 020 8979 9684

Careful debtor

The Careful Debtor sees debt is a useful tool when kept under control. The Careful Debtor will look to get the best unsecured lending products they can, and keep them well maintained.

A Careful debtor will present to us with more than one credit card account, normally on a zero interest balance transfer, car finance, and probably a zero interest bank overdraft – after all if you can get lending on zero interest why not do it?

A Careful Debtor is generally a strong prospect for mortgage lenders as they will demonstrate a good attitude to maintaining their credit rating. Some lenders may consider their higher levels of unsecured debt to be an issue and they may fall down on affordability calculations.

We can help the Careful Debtor manage their affordability calculations to obtain the lending they require.

Careful? Call us now on 020 8979 9684

Inattentive Debtor

The Inattentive Debtor will take on debt but is badly organised – as a result the Inattentive Debtor is likely to have problems on their credit file of a minor nature.

Perhaps a direct debit mandate has not been set up correctly and a credit payment missed. Perhaps they have been working away or travelling are not picked up their post and missed a bill as a result.

The most common issue for this group is the mobile phone account. Disagreements about mobile phone bills and charges, and sloppy management by phone companies and phone retailers, regularly leads to blemishes on credit files.

Some of the mainstream lenders will not like the Inattentive Debtor – why should they lend to them when they have Careful Debtors lining up for the same funds?

The Inattentive Debtor should obtain a copy of their credit file before attempting any mortgage application to establish any issues that need to be handled.

We will be able to assist the Inattentive Debtor to manage problems and secure a good mortgage rates.

Inattentive? Call us now on 020 8979 9684

Victim Debtor

The Victim Debtor has issues on their credit file that are not of their doing.

Perhaps they have been the victim of mortgage fraud, perhaps a current or previous partner has caused problems with credit which has impacted on the Victim Debtor’s credit rating.

Whilst mortgage fraud issues can generally be set right by the credit company concerned, this is not the case where the file holder has allowed another individual to trash their file.

The most common circumstance we see is where the Victim Debtor has taken out credit on someone else’s behalf to assist them, and then relied on the individual to make payments which were missed.

The Victim Debtor can also have issues due to the break up of a relationship where joint credit arrangements were left in the hands of a previous partner and not maintained.

Lenders can only deal with what is on the credit file and are not interested in the personal stories of mortgage applicants.

Therefore the Victim Debtor needs to clean up their credit file as best they can and deal with the consequences of what is left.

We can help the Victim Debtor obtain mortgage lending that is not available on the High Street.

Victim? Call us now on 020 8979 9684

Human Debtor

The Human Debtor has been disadvantaged by the scenarios that we all experience in life – bereavement, sickness, redundancy, relationship breakdown.

Being human means that we are all capable of being affected by what happens in our world and there can often be a financial impact which then shows on a credit file.

When we are dealing with a case for The Human Debtor we may see a bumpy period for a few weeks or months whilst they are coming to terms with a major life issue.

Commonly a credit provider has been consulted and informed that payments cannot be made in full or on time for a limited period and the provider has agreed to a change of terms – the borrower is rarely informed that this will impact on their credit file and show as a defaulted account.

As with most things in life, time is a great healer for the credit file. If these one-off credit issues are fairly historical, mortgage lenders will look to be sympathetic. A one-off period of credit issues can be seen for what it is and treated accordingly.

We can help the Human Debtor by introducing them to lenders that will accept a limited period of credit problems.

Human? Call us now on 020 8979 9684

Reckless Debtor

The Reckless Debtor has a cavalier attitude to debt and a poor grasp of mathematics. Typically they will over borrow on unsecured consumer debt and find themselves overstretched and borrowing more to pay other debt.

The Reckless Debtor is a classic target for the payday loan companies. They will often present to us with large unsecured debts, numerous missed payments, and perhaps some defaults or County Court judgements.

The Reckless Debtor is a suitable applicant only for the specialist mortgage company, and their biggest risk to obtaining lending is likely to be insufficient deposit or excessive payday lending.

We have access to a number of specialist lenders who will consider the Reckless Debtor in the right circumstances.

Reckless? Call us now on 020 8979 9684

Non-paying Debtor

The Non-paying Debtor takes no responsibility for their debt. Regardless of whether the debt is secured or unsecured, if the mood takes them they will spend money elsewhere rather than cover their debt repayments.

As a result the Non-paying Debtor will have late payments, defaults, and probably County Court judgements and Mortgage Arrears on their credit file.

This group are the hardest to assist with mortgage lending. We have very little to go on when approaching mortgage lenders as we are offering them a borrower with no obvious reason why payments have not been maintained and no obvious evidence that payments are likely to be maintained on future mortgage lending.

Where we can obtain lending for this group, it is ironic that rarely take action as they tend not to want to pay the fees and interest rates requested by the lender.

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