Jamie Elvin, director of London-based Strive Mortgages, says too many people are wrecking their credit by refusing to pay small fines. His example is a £60 parking penalty. “A parking fine may only be £60, but if you refuse to pay it for whatever reason, that blip on your credit score could cost you six thousand pounds in additional interest if high street lenders will no longer take you on.”
Strive specialises in mortgages for the self-employed and sole traders.
The danger comes when a fine or a disputed bill, such as a mobile phone account, grows into a County Court Judgement, or CCJ, or a default. Elvin says people “simply don’t join the dots when they are taking a stand over a small fine or unpaid debt. They don’t understand how quickly, if left unresolved, it can impact their mortgage.”
A lender, he said, sees data and not the argument behind it. “Lenders are not interested in the nuances and principles of the dispute. Once an unpaid parking fine or bill turns into a default or CCJ, all that they see is black and white adverse credit. That can mean fewer lenders, higher rates or a declined application altogether.”
He pointed to a cruel twist: someone with a strong income and significant assets can still pay more for years for a stand taken over a comparatively small sum.
Pay first, argue later
His advice is to settle disputed bills and fines first, then pursue a refund. “If a bill is wrong, pay it and then challenge it properly. Do not ignore it, because lenders are far less interested in who was right than whether the debt was left unresolved.”
The fine you never saw
Elvin says another common cause of trouble is a change of address. People move house and do not arrange mail redirection for six months or even a year, as is widely recommended. They also fail to update their driving licence and vehicle logbook.
“Then a speeding ticket or parking fine that they never know about turns into a default or CCJ,” he said. Many only find out when they come to remortgage and the CCJ is on their credit file. Even when it does not block a purchase or remortgage, he said, it often means paying more, because only specialist lenders rather than high street banks will lend.
Sources
- £60 parking fine could wreck your mortgage chances, warns broker
- Ignoring a £60 parking fine 'could cost you your home'
