COMING TO THE AID OF VICTIMS OF CIRCUMSTANCE
Maeve Ward is Director of Commercial Operations at Central Trust
Covid-19 has a lot to answer for. The past two years have been unprecedented in the modern era. Putting aside the awful loss of life for one moment, the financial hit has been immense. While we’ve faced economic hardship before – many of us were in the industry during the credit crisis of 2008 – when was the last time that governments deliberately took measures that put their economies into recession?
Of course, administrations around the world that had the means to attempt to soften the blow took steps to do so (after all, they do want to be re-elected). In the UK, Chancellor Rishi Sunak won many plaudits for the furlough scheme and other initiatives such as the Eat Out to Help Out scheme to encourage people to spend money in the hospitality sector. Mass unemployment was averted and while the huge amounts of money used will have to be paid back, this is likely to be over the long-term.
That’s not so say that everyone has managed to escape financially unscathed. The Office for National Statistics has revealed that the number of people claiming unemployment related benefits in February 2022 was 510,000 higher than in March 2020, when the pandemic and subsequent first national lockdown began.
Covid has also put a huge strain on relationships. Back when people said their marriage vows their each other, or couples agreed to cohabitate, they couldn’t have foreseen having to spend two years living and working together with very little respite from each other! Last year, The Independent reported that divorce enquiries to legal firms dramatically increased by 95 per cent in the wake of the pandemic, with women making up the majority of queries.
In turn, relationship breakups can often cause financial difficulties. The costs of divorce from legal fees and selling property for example can be high, and sadly often individuals can have the credit affected by the financial behaviour of their (ex) partner.
Finally, the cost of living crisis is putting a strain on people’s ability to pay their energy costs and the war in Ukraine is only going to prologue the issue. Sadly, the likelihood of missed payments will increase during this time.
All of these factors will lead to a rise in the number of people with impaired credit. However, it’s important to maintain a distinction between those who have impaired credit because they wouldn’t pay, as opposed to those who couldn’t pay.
At Central Trust, we look to help victims of circumstance who have missed payments but where it can be evidenced before and after that the circumstances have changed.
While they may fall short of securing finance from a mainstream lender due to the latter’s reliance on credit scoring or the need for two or more years’ worth of clean credit history, we take a common sense approach to underwriting, looking at the borrower’s circumstances in the round. Very often we can offer a second charge mortgage, which can help rebuild the credit clearing the historical, improving the score and enabling them to refinance back onto the high street.
There are always ups and downs through life, and while it may seem that the last few years have been more turbulent than normal, things do invariably improve. At Central Trust, we don’t look to penalise those who have been affected by things out of their control; we want to do the opposite and help them to rebuild their credit and move onwards and upwards.
