A1 coding BKR: what does it mean and what can you do about it?

An A1 BKR code is a record indicating that you have had a payment delinquency on a loan, but that you have reached a payment arrangement with your lender. The “A” stands for arrears report, and the “1” means that an arrangement has been agreed upon to clear the arrears. This record remains visible for five years from the moment your debt is fully repaid.

Have you discovered that there is an A1 code in your BKR record? If so, you’re probably wondering exactly what this means for your financial future. Although an A1 code shows that you have taken responsibility for your debt, this record can still hinder you for years to come when applying for a loan, credit card, or mortgage. We’ll walk you through everything you need to know about the BKR A1 code and, most importantly, what options you have to get rid of it.

What is an A1 coding with the BKR?

An A1 code is one of the special codes used by the Credit Registration Bureau (BKR) to indicate exactly what the status of a loan is. Of all the negative BKR codes, the A1 code is often considered the least severe. This is because it shows that you have taken responsibility for your debt and have actively cooperated in finding a solution.

In practice, an A1 code is often assigned as follows. You have a loan, credit card, or other form of credit, and due to circumstances, you are unable to make your monthly payments for a period of time. After two months of delinquency, the lender reports this to the BKR, resulting in an A code being added to your record. You then contact the lender and work out a plan together to catch up on the arrears. At that point, the record changes to an A1 code.

Lenders view this more favorably than, for example, an A2 rating —where the entire debt has been written off—or an A3 rating —where part of the debt has been written off. Even so, an A1 rating can still have significant consequences for your financial options.

How does removing an A1 code work

Mortgage with BKR A1 coding: what are your options?

Are you looking to buy a home but have an A1 credit rating? If so, it’s important to know that, under certain conditions, you can still qualify for a mortgage. Policies vary widely by bank and depend on a number of factors.

Banks such as ABN AMRO, Aegon, BLG Wonen, Obvion, and Rabobank are willing to grant mortgages to people with an A1 code under specific conditions. They mainly look at whether the code is accompanied by an H recovery code, how old the registration is, what caused the arrears, and what your current financial situation looks like. A one-time setback due to illness or divorce is assessed differently than a pattern of financial problems.

However, you do have to consider less favorable terms. Banks often charge a risk premium on the interest rate, ranging from 0.5% to 1.5% extra. For a €300,000 mortgage, 1% additional interest over 30 years can result in more than €60,000 in additional interest costs. Also, banks often require higher deductibles and certain mortgage types are not available.

An alternative is to have your A1 designation legally removed before applying for a mortgage. If this is successful, you can then apply to any bank without restrictions and benefit from standard interest rates. The financial benefit of this is often many times greater than the cost of the legal proceedings.

Can you have an A1 coding removed?

Yes, it is possible in certain cases to have an A1 code removed early from your BKR registration. This is done through a legal procedure that involves a balancing of interests between your interest (access to credit and the housing market) and the interest of lenders (alerting other parties).

The chances of successful removal are greatest when the backlog was caused by demonstrable external circumstances. Consider illness, divorce, unexpected job loss or other calamities that were beyond your control. In these cases, it can be argued that the situation is not representative of your normal financial behavior.

Removal is also possible when the consequences of the registration are disproportionate to the original arrears. Suppose a relatively small arrears on a telephone subscription now prevents you from buying a house, even though your income is more than adequate. Then the court may rule that it is unreasonable to maintain the registration.

The Supreme Court’s landmark Santander ruling in 2011 established an important legal basis for this. The Supreme Court ruled that an individual balancing of interests must take place for every BKR registration. At Dynamiet Nederland, we have extensive experience successfully challenging A1 codes. We would be happy to work with you to explore the options available in your specific situation.

An A1 rating doesn’t have to spell the end of your financial dreams. With the right approach and professional help, there are often more options available than you might think. Want to find out what your options are? Contact us for a free consultation. We’ll review your situation together and discuss which path offers the best opportunities for you.