26% of people believe they need to wait at least five years after receiving a CCJ before applying for a mortgage.

According to the 2024 Pepper Money Specialist Lending Study, 66% of people say they know what a CCJ is, but their understanding falls when it comes to the impact of a CCJ on a mortgage application.

The research found that 18% of people believe they need to wait longer than five years after receiving a CCJ before applying for a mortgage, with 8% thinking they would need to wait up to five years.

The study identified that 4% of people have received a CCJ in the last three years, although this was the least common cause of adverse credit. The most common cause was a missed credit payment (11%), followed by several missed payments leading to a Default (7%) and unsecured arrears (7%). A further 6% say they have entered a Debt Management Plan (DMP) in the last three years, with 5% having secured arrears.

Respondents’ main reason for missing payments was difficulty managing money (30%), 27% said it was due to reduced income for a period, and 22% cited increased expenditure.

Paul Adams (pictured), sales director at Pepper Money, said: “The Pepper Money Specialist Lending Study is an important barometer for understanding the financial circumstances of the nation’s households, but it also shines a light on common misconceptions. Despite the fact that 78% monitor their bills monthly, there’s an upward trend of adverse credit in this year’s study. 8.38 million people have experienced adverse credit in the last three years. This is the highest figure since we began our regular research five years ago.

“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.

“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.”

Jon Stones, managing director at Mortgage 1st Business, added: “Unfortunately, just a little knowledge can be a dangerous thing. While it’s encouraging that so many customers are aware of their credit profile, this research shows there are still many people who don’t fully understand the impact it can have on their mortgage opportunities.

“As brokers, it’s important that we help to get the message out to our customers, existing and potential, that there are options for them, even if they have recent experience of adverse credit. 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.”