The main reason for a reduction in income, according to 29% of respondents with adverse credit, was because they were furloughed.
Those with prior adverse credit have suffered greater financial upheaval than the general population as a result of COVID, according to research from specialist mortgage lender Pepper Money.
The research carried out in association with YouGov found that, whereas less than a quarter (24%) of the general population say their income has decreased in the last year as a result of COVID, over a third (36%) of adults with adverse credit say the pandemic has resulted in a reduction to their income.
The main reason for a reduction in income, according to 29% of respondents with adverse credit, was because they were furloughed.
A further 16% said they received lower income via self-employment, and 16% said they lost their job. Just over one in ten (11%) said their income was reduced by their employer.
With this reduction in income, many people with adverse credit have relied more heavily on credit. Nearly a quarter (24%) of people with adverse credit say their use of credit has increased compared to 12 months ago, compared to 13% of the general population.
And people with adverse credit are more pessimistic about their mortgage prospects as a result of the pandemic. Almost two thirds (65%) of adults with adverse credit think that the economic downturn as a result of the pandemic will make it harder to get a mortgage in the future, compared to 55% of the general population.
Paul Adams, sales director at Pepper Money, said: “We have already seen numerous reports highlighting the fact that the financial impact of the COVID pandemic has not been distributed evenly across the population, and our research shows that those people with adverse credit have suffered a greater upheaval in their finances than the general population.
“However, this does not mean that this group of customers has to be excluded from the mortgage market. Whether customers have experienced a change in circumstances, a fluctuation in income, or are self-employed, there are lenders, like Pepper Money, that take a more inclusive approach to mortgage lending and are able to make decisions based on individual circumstances.
“This commitment to financial inclusion is an important step in helping those who have been impacted financially by COVID to continue to pursue their life plans and goals. Brokers can help with this, by clearly communicating that they are able to help customers with adverse credit and have access to forward-thinking lenders with competitive products.”
