More than four in 10 borrowers with adverse credit say their debt levels have risen over the last year, data from Pepper Money shows.  

Rising debt levels among this group have lifted to 43% from 33%, according to the lender’s 2023 Specialist Lending Study.   

It finds that 30% of people with adverse credit have outstanding debts, aside from their mortgage and student loans, of more than £5,000, while 9% have outstanding debts of more than £15,000.  

The report adds that 45% of people with adverse credit say their use of Buy Now Pay Later credit rose over the last year, with 17% saying it has “increased a lot”.  

Pepper Money business development director Ryan Brailsford says: “It’s often the case that customers who have a history of adverse credit also have significant balances on unsecured debt.   

“One way to get on top of these debts is by raising capital with a remortgage to pay off the separate balances, consolidating them into additional borrowing secured on their property.  

“Restructuring finances in this way requires careful consideration.   

Brailsford adds: “However, in the right circumstances, it can significantly reduce the monthly cost of servicing that debt, which could prove a vital lifeline for households struggling to make ends meet in the current environment.  

“When it comes to debt consolidation, many lenders will include a maximum debt-to-income ratio as part of their affordability calculation, which could limit a customer’s ability to raise enough capital to clear their debts.”